Industry and the FSA must create a summary box for every financial service products within the next six months to meet new 'guidelines' set out by the Treasury Select Committee.
Latest report by the TSC, entitled 'Restoring confidence in long-term savings', suggests improving product information is essential if consumer confidence in the UK is ever going to be restored.
Challenging both the industry and the regulator, the Committee urges them to develop a "simple standardised Summary Box" within the next six months, which should be short enough to be able to be displayed within most marketing material.
Even though firms have six months to design the summary box, TSC members want feedback on the issue even earlier than that. "We would like all the parties to report to us on progress here by the end of the year," the report says.
As a part of the Summary Box, the TSC believes products should be 'risk-rated' to "signal" whether they are high or low risk.
Although the Committee acknowledges this may give rise to some "practical difficulties", especially as some products change over time, the TSC still believes a simple risk rate system would be a "vital step in restoring confidence".
TSC says: “We recommend that the risk rating attached by the product provider to the product should be regarded as an important part of the sales advice given to the client.”
“The industry should appreciate that, if such an indicator is implemented, it would provide an important safeguard against mis-selling.”
The Summary Box should also include information on whether clients are guaranteed to get their money back or not should the markets take a downward turn and whether there are any other guarantees attached to the product.
Charges for the product should also be outlined as well as any possible early redemption fees, the TSC report adds.IFAonline
What made financial headlines over the weekend?
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch