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AJ Bell urges FCA to tackle suitability and disclosure docs

AJ Bell chief executive Andy Bell has written to the FCA calling for a “root and branch” review of the complex and lengthy disclosure documents clients receive at the point of sale.

In the letter, sent to FCA director of strategy and competition Christopher Woolard yesterday, Bell argues savers and investors are being deluged with paperwork when they come to taking out a financial product.

He says separate reviews have been carried out into key features illustrations, initial disclosure documents and suitability reports, all with the same aim of helping consumers make better informed financial decisions.

In the letter, Bell says: “Looking at the various elements in isolation is unlikely to result in a good outcome.

“Now is the time for a root and branch review of point of sale disclosure as a whole, with the objective of radically shortening and simplifying the information consumers receive when they are purchasing a financial product.”

He sets out the raft of documents that savers can receive when they engage with financial services firms, including suitability reports, KFIs, key investor information documents, and transfer value analysis reports. Bells says these can often to run over 30 pages.

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Bell argues “the FCA should be bold” and challenges the industry to get most of the necessary investor information onto a single page document.

He says: “The overarching aim of this project should be simplification. Ideally we would like to see a reset of the regulatory approach to disclosure so that, rather than adding layers to a broken model, the FCA builds a new framework that savers can really engage with.

“The current disclosure rules were created in a different era and without serious consideration of how they interact with each other. The pension freedoms have redrawn the retirement landscape, and Brexit has the potential to give the UK greater control over setting its own rules in some areas.

“This feels like an ideal catalyst to look at all the information retail investors receive at the point of sale so we can build a system that is fit for purpose today and will help deliver better consumer outcomes.”

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. Seems like a sensible idea and nothing different to what we have been saying for donkeys years.
    I wonder if the regulator will react positively this time? I doubt it but we can but hope

  2. Richard Anderson 11th July 2017 at 1:28 pm

    You are leaning on an open door there Andy, but are way off beam with 30 pages. A SIPP investment with a good provider (no names!!!) would generate the following: Terms of Engagement – 14 pages, Fee and Service Agreement – 4 pages, Illustration – 7 pages, Suitability Letter – 12 pages, KIIDs (say portfolio of 10 funds) – 20 pages, Key Features – 12 pages, Terms & Conditions – 24 pages, Charges schedule – 4 pages. That’s 97 pages, and if its for a pension consolidation for say 4 old plans then add 12 more pages for the ‘Replacement Plans’ Forms. There is so much paper that we have to put this lot into a lever arch file !!!

  3. Totally agree. The amount of paperwork a new client will get is borderline ridiculous. 30 pages is an underestimate by a long way. More like 90-100 pages and more if there are more providers/products.

  4. How many times have industry people complained about this and nothing ever gets done because, as long as you can get had over the the client and FOS, you have to hand out all this stuff or you are taking a risk, even if you have disclosed everything to the client verbally.
    The only way to get the result Andy Bell wants is to go back to Caveat Emptor, and it ain’t gonna’ happen.

  5. Slight correction to my post:
    How many times have industry people complained about this and nothing ever gets done because, as long as you can get had over by the the client and FOS, you have to hand out all this stuff or you are taking a risk, even if you have disclosed everything to the client verbally.
    The only way to get the result Andy Bell wants is to go back to Caveat Emptor, and it ain’t gonna’ happen.

  6. Robert Milligan 11th July 2017 at 3:32 pm

    Most of the documentation given to the client is to negate them having any possibility of making a complaint later, If we get the advice correct, then very little paperwork would be required, the client mostly never reads it anyway, I see to many advisers hiding behind, (Mostly Networks) the paperwork said this the paperwork said that, so refuse to uphold a complaint, my point is if the advice was wrong, then no mater how much paperwork you have endeavoured to obfuscate the advice by , your are still wrong!!

  7. Long overdue – the amount of paperwork a client is provided with is ridiculous. Clients become disengaged because of all the jargon and generic rubbish in illustrations, KFDs, fact sheets/KIIDs etc.

    Sometimes I wonder if the FCA has ever witnessed the amount of paperwork for a client taking out multiple products across investments, pensions, protection & mortgages as part of a holistic review… it’s a nightmare for advisers and clients.

  8. Hi Andy

    Mr Woolard, would like to thank you for your detailed letter, but unfortunately he is to busy, thinking of ways to spend his bonus….

    I am sure when he has decided, he will give your letter the due care and attention it deserves…… then throw it in the bin

    Yours
    An FCA spokesman/woman

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