Michael LewisThe FCA Practitioner Panel has expressed concerns around the FCA’s proposals on Consumer Composite Investments, following the regulator’s consultation covering changes to cost information and rules for the transitional period.
The Panel supports the principles of the consultation – namely to create a flexible regime prioritising consumer outcomes and allowing firms to tailor communications to consumers’ needs – but remains concerned that the information requirements it proposes will not achieve clarity for consumers.
The Panel highlights the following issues in particular:
Transaction costs
The Panel supports proposals to remove the requirement for implicit cost disclosure, though notes that some reporting differences would remain in the market, and so advocates for an entirely consistent calculation methodology in order to promote consumer understanding.
Transitional provisions
While the Panel welcomes the clarification that distributors will note be able to create or amend product summaries during the transitional period, it highlights that introducing product summaries alongside the existing disclosure regime will still be complex and costly for firms, and may create more confusion for customers.
It suggests a single effective date – aligned for open and closed products in order to reduce necessary cost and complexity – to ensuring distributors to plan appropriately and prepare customers for the relevant changes.
Digital aspirations
The Panel suggests that the FCA’s proposals in relation to digital communications requires further clarity, especially in light of the transaction costs and transitional provisions considerations. It also notes that distributors expected to implement digital journeys will need clarity on timing in order to deliver product summaries after the transitional period.