FSA proposes investment "Quick Guide" for consumers

The regulator says firms would be required to give customers the two-page guide as part of point of sale information in order to enable them to make informed decisions about investing in products such as life policies, personal pension schemes and investment trust savings.

The main proposals of the consultation are that firms must produce the guide as a stand alone document and put it at the top of their marketing packs. Firms will also have to ensure the guide is no longer than two pages, include the Key Facts logo and a regulatory message as well as following a question and answer format.

But the Association of Independent Financial Advisers (Aifa) has expressed concerns about the proposed new documentation. Fay Goddard, deputy director general at Aifa, says: “The Quick Guide is not particularly IFA friendly and looks more suited to a direct sales environment.”

Goddard adds that Aifa will be examining the documentation and, in consultation with the FSA, will suggest there needs to be some form of trade off between the amount of information already provided in Key Facts Illustrations (KFI) and the proposed Quick Guide. Aifa also has concerns about the wording so far suggested by the FSA for the guide as well as more a more general concern that consumers will be overloaded with information.

Dan Waters, director of retail policy at the FSA, says: “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.”

As reported back in February - when proposals for the Quick Guide were fist announced - Aifa said it would be working with the FSA to try to return KFIs back to their originally intended format, having been consumer tested as a much simpler document in the mortgage market already. Back then the FSA still appeared keen to ensure the Quick Guide would remain a single-page document although it tested a two-page document for personal pensions.

The Quick Guide is one of the main elements of a wider disclosure package for investment products replacing the current Key Features regime and work on the other parts of the package is underway, says the FSA. The regulator is aiming 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).

The FSA plans to bring the Quick Guide into effect at the same time as the rest of the wider disclosure package. It says the intention is to announce the implementation timetable for the package in the March 2006 consultation and 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.

If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].

IFAonline

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