IDD to be scrapped
The initial disclosure document is to be replaced with a requirement to disclose key information about a firm’s service in the first client meeting.
The information would cover the firm’s product range and how it is paid.
The FSA also plans to reduce the number of “trigger points” for issuing a key facts illustration, meaning intermediaries will only have to issue one when advice has been given on a certain product. Currently, a KFI has to be issued when information has been given about a product.
It has ruled out using the same “independent” and “restricted” labels that will be required for investment advisers under the RDR. Instead, firms must ensure they give customers a “plain and simple” explanation of whether there are any limitations in the product range they provide.
The FSA has decided not to go ahead with its proposal for lenders to calculate a mortgage’s affordability over a 25-year term, even if the actual mortgage term is longer.
Your Mortgage Decision director Dominik Lipnicki says: “Over the past few years, I think people have found the initial disclosure document useful because it is quite simple. It lists how we get paid, whether we are whole of market or use a panel and how to complain. I hope the new system of disclosure will be just as useful.”