The FSA has outlined areas of with-profits products that need to be expressed more clearly to consum...
The FSA has outlined areas of with-profits products that need to be expressed more clearly to consumers.
Its latest discussion paper, the third of four concerning with-profits schemes, states that consumers have only a rudimentary understanding of how the products work and providers should be careful not to overload customers with information.
The regulator said research shows customers do not have adequate knowledge of how features such as smoothing, bonuses and guarantees work. They generally have little grasp of the benefits and risks of the products or how factors other than investment performance may affect returns to policyholders.
The research also identified that policyholders do not know how their investments progress after being bought. The paper warns that information needs to be presented in the right way and to the right people. The FSA says a balance needs to be drawn so investors are not presented with a large chunk of information that they do not read. It suggested information should be targeted for different audiences, with key information given to all customers while more detailed information could be available on request to advisers and those customers who want it.
Responses are invited by 15 February and will be brought together to draw up the conclusions of the with-profits review, to be published in the spring. Copies of the report are available from www.fsa.gov.uk or by telephoning 0845 608 2372.
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