The Financial Conduct Authority (FCA) has acknowledged long disclosure documents are confusing clients and indicated more guidance will be released later this year.
In July AJ Bell chief executive Andy Bell wrote to the FCA’s director of strategy and competition Christopher Woolard about the ‘failings’ of the disclosure policy for pension and investment products.
The firm raised specific concerns about point of sale (POS) documents which advisers and providers need to provide.
'Owing to their volume and complexity, documents such as suitability reports, transfer value analysis reports and investor information ‘leave savers in danger of investing in products they don’t understand and that may not be suitable for their need’, AJ Bell said.
Woolard wrote back to Bell saying he accepts long documents can confuse customers and that the FCA will be publishing more non-handbook guidance on this later this year.
Woolard said the FCA is keeping its disclosure rules ‘under review and will consider opportunities for a broader review’.
‘In the meantime, we will continue to make iterative improvements to disclosures under our control where we consider that this could benefit consumers,’ he said.
Woolard added it was firms' responsibility as to how they communicate with clients and not the FCA's.
Andy Bell, AJ Bell’s chief executive, said: ‘When it comes to POS disclosure we think the risk of consumer harm is clear. The FCA agreed lengthy documents often confuse customers and given the length of current disclosure documents this is an admission the current regime does not work.
‘With wide scale reviews of the asset management and platform markets under way it is hugely disappointing the FCA are not prepared to do the same for practical areas where there is a clear risk of consumer detriment. The further guidance on effective consumer communication that Woolard confirmed would be published later this year is a step in the right direction but to realise meaningful change we need to stop tinkering at the edges and engage in a deep dive review of POS disclosure as a whole.’