Existing key features documents are to be replaced with simplified key factsheets, which include p...
Existing key features documents are to be replaced with simplified key factsheets, which include past performance information.
The documents, which have been proposed under the FSA's latest consultation paper CP170, will be uniform across product types, carry prominent key facts and FSA logos and simplify much of the content for consumers.
The FSA is also pushing to clarify the explanation of product charges and provide examples of the effect of charges based on the client's personal details. These will be based on reduction in yield calculations rather than cash disclosure.
Richard Eats, communications director at Threadneedle, said: 'Reduction in yield calculations are rather complex and we would prefer to see the simpler cash disclosure method that is standard in the US.'
The FSA wants the factsheets to include a guide highlighting the most important features of the product in bullet point form, while a frequently asked questions section will aim to clarify the main terms and conditions and signpost where customers should look for further detail.
Under the proposals, fund past performance would be included in the key facts documents.
The inclusion of the data, as proposed under the FSA's latest consultation paper, is to ensure the UK follows Ucits requirements, despite the FSA's own reservations on the value of past performance data to consumers.
One part of the Ucits directive was adopted into UK law at the end of last year but the requirement for a uniform prospectus for investment products was put off while the FSA carried out its own consultation on disclosure.
CP170 will be quickly followed up by a policy statement in the summer, the FSA confirmed. To comply with the Ucits directive, the changes have to be incorporated into the legislation by August, although the new regime does not apply to groups until 13 February 2004.
The presentation of past performance is likely to comprise a combination of cumulative and discrete returns over a five to 10 year period. This will be presented in a sterling format instead of percentages, although the FSA is consulting over whether to include a benchmark, fearing consumers will focus on this rather than the underlying investment strategy of the fund.
Developed by industry-wide group
Joined in 2002
'Educate clients' children'
Raised £15m earlier this week
From 8pm Friday 19 October