Brexit presents an opportunity for the UK to review disclosure measures and simplify consumer information, the Financial Services Consumer Panel has said.
In a paper out on 23 February, the regulator's panel claimed current complex disclosure requirements were a product of EU regulation and could be tackled as part of the UK's exit from the bloc.
Advisers have long bemoaned the issue of creating short and clear suitability letters for clients under the current disclosure regime.
The panel said multiple directives developed by the EU for the various sectors within the industry had created inconsistencies that confused consumers. This had also undermined the ‘overarching' role of EU regulation in the past.
It said: "Too often consumers are bombarded with information which they cannot understand. Many of these disclosures are dictated by EU legislation."
Although the panel warned regulatory changes under Brexit presented both risks and opportunities for financial services - for instance they could put consumers in danger if certain EU measures are weakened or taken away completely - it argued there was an opportunity to address the shortcomings and deliver a regulatory regime with better consumer outcomes.
The paper referred to the Financial Conduct Authority's (FCA) suggestion for a post-Brexit approach to reviewing disclosure material. The regulator had said: "Rather than the sectoral approach to requiring different disclosures, we see significant benefit in considering the interaction of the different information consumers receive."
On the back of this the regulator suggested a comprehensive review of the consumer purchasing process, including advised and non-advised channels to consider consumer information needs and the impact of what is currently disclosed.
The consumer panel said regardless of the UK's position post-Brexit, the regulator should review disclosure processes at various stages of a consumer's journey through financial services, to ensure they get information in an understandable format, at the time they need it, and with which they can engage.
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Reforms not enough
An economic cocktail
To encourage consumers to shop around
Will report to Pat Shea