AJ Bell co-founder and chief executive Andy Bell urged the city watchdog to “be bold” and overhaul the framework for disclosure requirements, said the letter addressed to Christopher Woolard, director of strategy and competition at the FCA.
At the point of sale a UK investor would typically receive a suitability report, a key features illustrations report, a key investor information document and a transfer value analysis (TVA) or new transfer value comparator (TVC).
As a result, the current rules see investors “blinded by the sheer amount of information presented to them,” said Bell, revealing that clients are often handed out documents that run into 30 pages.
“It has become increasingly clear to us that the current disclosure regime has become so complex that it is confusing for consumers and is not helping them make informed decisions.
“Ultimately it could result in consumers ending up with products that they don’t fully understand or, worse, are not the best product for them,” said Bell.
He added that pension freedoms have “redrawn the retirement landscape”, with Brexit having the potential to give the UK greater control over setting its own rules in some areas.
‘Root and branch’ overhaul
It is time to strip back disclosure requirements and undertake a “root and branch” review of point-of-sale documentation, rather than the individual consultations run by the FCA over the documents which “only tackle one problem at a time”, Bell said.
Bell is proposing for information on fees, charges and peformance to be limited to a one-page document.
“In doing this, the FCA should be bold. Can we, for example, get the majority of information a retail investor needs onto a single page document?
“Clearly this would be a challenge and people should have access to additional information should they want it, but for the majority of people we believe this radically simplified format would suffice,” he said.