The FSA is to conduct research into consumer understanding of the initial disclosure document and payment menu followed by a consultation on proposed changes.
The regulator’s business plan for 2007/08 shows it will focus on assessing how effective depolarisation has been in improving access to a wider choice of products, with understanding of the IDD and menu central to this work.
In the second quarter of 2007, the FSA is due to publish research into its rules surrounding the suitability letter and menu as a follow up to a report last year which found the rules were relatively expensive for some firms.
In the fourth quarter, the FSA will publish the results of consumer research into the menu and IDD and consult on proposed changes. It will also begin work to assess the suitability of recommendations made to clients seeking advice.
Director (retail policy and asset management sector) Dan Waters told Money Marketing in November that the menu had not been successful in increasing consumer understanding and suggested a radical simplification of the document could be required.
Changes were left out of Newcob as the regulator was concentrating on the case for retaining the menu under Mifid before assessing any amendments to the regime.
The FSA is also to review the effectiveness of its basic advice regime and plans to publish a full review by mid-2008.
Ark Financial Planning director Philip Stevenson says: “Yet again, the FSA failed to listen to the industry’s concerns and produced a process that benefited no one. It now appears to have realised its mistakes but who is to say that it will listen properly this time?”