Proposals for a Quick Guide setting out the most important factors consumers need to consider before buying a particular investment product were set out today by the Financial Services Authority.
Firms would be required to give customers the two-page guide as part of point-of-sale information to help them make informed decisions about investing in products such as life policies, personal pensions schemes and investment trusts savings.
Dan Waters, Director of Retail Policy at FSA, said:
"Consumer testing of the Quick Guide, demonstrates that it will stand out from other marketing material and should enable firms to clearly set out the key benefits and risks of each type of investment in an easy-to-read format. In the same way as the existing Key Facts documents for mortgage and general insurance products, it will enable people to evaluate much better whether a particular product would be right for them."
The main proposals in today's consultation are that firms must:
- produce the Quick Guide as a stand alone document;
- put the Quick Guide at the top of the marketing pack;
- produce a Quick Guide that follows a tabular format containing numbered questions and bulleted answers;
- ensure the Quick Guide is no longer than two sides of printed paper; and
- include the 'Key Facts' logo and a 'regulatory message' in the Quick Guide.
The Quick Guide is one of the main elements within a wider disclosure package for investment products, replacing the current Key Features regime. Work on the other parts of the package is underway, and the FSA aims to publish a further consultation on this in March 2006 including a new approach to projection rates, and proposals on the disclosure of charges.
The final outline of the Quick Guide will reflect the results of this consultation and consumer testing of the complete disclosure package to be undertaken later this year to ensure that the various elements work together in a cohesive way. The final proposals will also take account of further developments in the implementation of the Markets in Financial Instruments Directive (MiFID).
To minimise disruption and cost the FSA plans to bring the Quick Guide into effect at the same time as the rest of the wider disclosure package. The intention is to announce the implementation timetable for the package in the March 2006 consultation. The provisional plan is to bring the disclosure package into effect in 2007, to coincide with the planned implementation of the MiFID and the simplification of the Conduct of Business sourcebook.
Background
- CP05/12: Investment product closure: proposals for a Quick Guide at the point of sale is available on the FSA website.
- Samples of the proposed Quick Guide can be found at Annex 2 of CP05/12.
- Details of FSA proposals for simplification of the COB can be found at Chapter 5 of CP05/10: Reviewing the FSA Handbook
- The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
- The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.
