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FCA: EU disclosure rules confuse consumers

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The FCA is warning onerous European disclosure requirements risk disengaging consumers and damaging their ability to make decisions.

In the regulator’s response to the European Commission’s call for evidence on Europe-wide regulation, it says firms are forced to disclose an ever-increasing amount of information.

Regulations such as Mifid II and Priips risk “confusing and discouraging customers”, the regulator says, with “little attention apparently given to how the information included in the various disclosures interacts”.

It says: “As legislation is reviewed, revised and updated, disclosure is typically added rather than removed.”

It adds: “A key lesson from behavioural economics is that the more information given to consumers, the less able they are to engage and use the information to make effective decisions.

“Therefore, every time EU legislation requires more disclosure, the less effective this disclosure and pre-existing disclosure may be at empowering consumers to make effective decisions.”

The FCA also warns standardised disclosure regimes – including the Mortgage Credit Directive – can “unintentionally constrain the best content and format for disclosures required in local markets in respect of local products and issues”.

The FCA adds “repeated but uncoordinated changes” also hit providers and recommends aligning implementation deadlines to avoid disruption.

The regulator is conducting consumer testing, including on how providers issue wake-up packs to customers, as revealed by Money Marketing in June 2015.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Sounds like a vote for Brexit from the FCA then.

  2. Even the FCA cannot live with EU regulation. God help the rest of us. Vote Leave!

  3. Or a vote for making staying in more workable.

  4. “I have made this longer than usual because I have not had time to make it shorter” (Blaise Pascal).
    These documents that we have to give out are just getting embarrassing.

    The only reaction I ever hear from those clients who do read the IDD’s, KFD’s, Client Agreements independently are along the lines of “can’t you write something more succinct, or is this just you covering your own backside ?”

    No amount of explaining that the format is dictated in the majority by our Regulators really gets us away from our duty to issue and abide by these, but I’m not sure that anyone remembers the spirit in which they were conceived anymore.

  5. Client currently ignore the documents as they are neither interested or understand them. No doubt they will continue to do this no matter how much explaining is done by the adviser.
    Bureaucrats keeping themselves in a job!

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