In 2007 a sample of 200 KFDs and Simplified Prospectuses found that 35 per cent were ineffective because of deficiencies and the remaining 50 per cent were not readily understandable due to a mix of poor design, structure and content.
The FSA challenged all firms to make significant improvements to these documents by the end of 2008.
In January and February this year the FSA re-assessed all the documents in the worst part of the original sample, and also a selection of others.
The regulator says over two thirds of these have shown some “significant improvements”, with the majority of the sample that did not make sufficient improvements produced by asset managers.
The FSA says it will publish an update to its Good and Poor Practice report next month and will follow up with firms who produce KFDs and Simplified Prospectuses that are still not up to the standard expected.
FSA head of retail investments policy Andrew Sykes says: “We are pleased to report that, as a result of our work over the last year, and firms’ own efforts, we have seen a marked improvement in the quality of product disclosure. This proves that clear, effective documents can be produced as a helpful aid for consumers.
“We will maintain our focus on the quality of disclosure and will take appropriate action to follow up with those firms that have not achieved the standards we expect. In particular we expect to have some tough conversations with some asset managers.”