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Comment of the week: Does the FCA understand the information overload?

We have just recently carried out an annual portfolio review for a client which required some rebalancing of their investments. It also included back to back Isa applications, a move over to explicit pricing on all their funds and setting up their income withdrawal for the next year.

The bewildered client had to receive 182 A4 pages. SIDs, Fund Fact Sheets, applications forms, declarations, suitability letter etc. And this excluded the initial disclosure documents. There was nothing that we could have left out without the sale being non compliant. 

So what would the FCA have us not provide? SIDs, Conflict of interests declaration, suitability letter? Which part of EU law would they like us to ignore or not highlight to the client?

And having provided that guidance would they like to indemnify us against future retrospective reviews by the FCA or claims from disgruntled clients?
 I totally agree with the sentiment but I have long suspected that the FCA do not understand how much information we actually have to give. A few years ago, the best practice guidelines for suitability letters were pathetically naive.

Sam Caunt  


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Not very long ago, the FSA declared that it wanted to see advisers streamlining the amounts of paper and verbiage with which we’re required to issue clients so as to reduce the likelihood of information overload.

    Yet it was the FSA that imposed the requirements for all this paper to be issued in the first place.

    One branch of the FSA has said You’ve got to supply your clients with this, this, this and that (on top of everything else), whilst another has said subsequently that, somehow or other, we have to issue clients with less paperwork. Plus, there’s constant pressure to deliver better value for money.

    How many clients have ever complained that they didn’t understand the nature of the investment into which they entered because they weren’t supplied with all these additional items? Was it really a problem that needed to be addressed or was it a case of the FSA imagining that it needed to impose a fix on something that wasn’t actually broken?

    It’s an impossible situation ~ we’re damned if we do and damned if we don’t. What kind of regulation is that?

    Would it not make vastly more sense and be vastly more cost-effective simply to offer clients the option of receiving all these extra pieces of information rather than issue them all regardless of whether they’re actually wanted? A minority of clients may be interested in trying to make sense of an illustration of possible future benefits (the projections on which are highly unlikely to be borne out in practice) and wading through ten or more KIID’s but most, I suggest, are not.

    We do not yet know to what extent the FCA will be more pragmatic in its requirements. We can only hope that it will be.

  2. Did the FSA ever say PAPER? PDF for anything which is not termed “Keyfacts”. that way the client might actually read the Keyfacts and if they then loose the will to live and not read the PDF, at least trees haven’t died for nothing 🙂

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