The Financial Conduct Authority has set out proposals to simplify how platforms, advisers and wealth managers communicate investment costs to consumers.
The move will bring all investment cost disclosures in line with previous investment product disclosure reforms, which the regulator said would create a more “consistent framework” for firms to give customers clearer, more useful information.
The consultation, launched on July 2, will close on August 21.
Lucy Castledine, director of consumer investments at the FCA, said: “We want more consumers to feel confident investing by getting clearer information in plain English on products and charges.
“The changes will give firms more freedom to innovate and communicate in ways that build trust and support informed decisions to help consumers navigate their financial lives.”
The regulator said the proposals will allow firms to “innovate, test and compete” to inform and engage retail investors, communicate in plain English and give information in engaging ways.
It said this will help consumers compare products more easily and invest with greater confidence, noting that consumers struggle to understand investment costs and their impact on returns.
Under the proposals, distributors would present their own costs alongside product costs, consistent with the Consumer Composite Investments format when selling products, and account regularly for the total cost of investing.
The proposals also cover firms’ disclosures to consumers when they charge fees or pay interest on client cash.
Rob Hillock, head of personal financial planning at Broadstone, said: “This consultation reflects a recognition that investment disclosures have become increasingly complex, making it difficult for consumers to understand what they are paying and the value they receive.
“A simpler, more consistent approach to presenting product, advice and distribution costs has the potential to improve consumer understanding while reducing unnecessary complexity for firms. The key will be ensuring that simplification doesn’t dilute transparency or make it harder for consumers to compare products and services.
“Firms should use the consultation period to review how they communicate costs and consider what operational changes may be needed if the proposals are implemented.”
