The Financial Services Consumer Panel (FSCP) has questioned the FSA's decision to scrap the costs Menu and Initial Disclosure Document (IDD).
In a letter to the FSA, John Howard, chairman of the Financial Services Consumer Panel, says the regulator has only considered cost when deciding the documents' value.
He says: “We believe that when measuring consumer benefits of regulation, a major measure should be consumer confidence, which may not be capable of quantification in pounds and pence.”
The FSA withdrew plans to include IDD and the Menu on top of the information requirements for the Market in Financial Instruments Directive in May.
However, Howard urges the regulator to take broader aspects of consumer benefit into account when making decisions about costs versus benefits in future.
He says: "… in this case the FSA seems to have measured only selected benefits of regulation and only those directly measurable in economic terms.
"It has then used these results as the reason for dropping some key consumer protections, in the form of the price menu and IDD."
He recommends an improvement of the documents rather than scrapping them altogether. The documents have been used for two years, which Howard says is not enough time for consumer purchasing to change so significantly. He highlights the FSA said itself it will take a generation to turn around financial capability.
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