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£140m cost of key facts format

Proposals for the next generation of product disclosure could cost the industry £140m with the end of key features documents and separate disclosure regimes for life and pensions and investment products.

According to a draft FSA consultation paper on product disclosure due to be published on January 31 but seen by Money Marketing, KFDs will be replaced by key facts, a new format transforming product information to consumers.

The most radical difference between the two new regimes will be the need to disclose past performance on investment sales, something the FSA had strenuously opposed.

Providers will have to include a bar chart showing 10 years&#39 discrete annual returns, cumulative returns for a hypothetical £1,000 and a prominent risk warning.

The FSA logo will become more prominent on literature and disclosure of charges will be substantially changed to focus on comparability between products.

The front of the new key facts, which must be given to consumers early in the sales process, will feature only the FSA logo, the company name and the name of the product.

Suitability letters will be strengthened as the FSA believes they are read by consumers and post-sale confirmation letters will be scrapped.

The new document must also be sent out on execution-only sales.

Invesco Perpetual chief executive Mike Webb says: “The use of discrete past performance sounds very sensible. It will show an investor what sort of ride they are in for.”


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