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The Financial Services Authority (FSA) has today published a Consultation Paper containing proposals which aim to further help investment advisers provide consumers with clear and simple information about services and costs.
The FSA's new regime for the conduct of investment business - Conduct of Business Sourcebook (COBS) - came into force on 1 November 2007. This introduced a principles-based approach to disclosure, giving investment advisers flexibility over how they give information to consumers on their services and costs.
Following consumer research, the FSA is proposing to build on COBS by introducing a single disclosure document, also in guidance, to combine the information contained in the Menu and Initial Disclosure Document (IDD). This would simplify investment disclosure and continue to give firms discretion over how the information is presented while maintaining their responsibility to consumers. The regulator is also seeking views on whether it would be appropriate for the industry to develop guidance in this area.
Dan Waters, Director of Retail Policy and Themes at the FSA, said:
"Our emphasis on more principles-based regulation means focusing on the outcomes that matter, rather than processes and procedures. This new document aims to provide key information in a more streamlined way to help consumers better understand the services offered by advisers. But, as guidance, it is only one way for firms to comply with COBS disclosure requirements. Firms will be free to develop their own disclosure documents to provide effective and clear disclosure to their clients."
The FSA invites views on the questions set out in the Consultation Paper by 19 May 2008.
In placing this simplified document in guidance, the FSA is providing firms with an effective way of complying with a number of European Union disclosure requirements. In line with European requirements, for firms that wish to use this document, it may further reduce the number of documents investment advisers provide at the point of sale and give firms greater flexibility in achieving clarity for consumers.
