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Information overload

Mortgage key features are “unnecessarily complicated, ludicrously lengthy and often misleading documents,” said the chairwoman of the financial services consumer panel at the FSA annual meeting.

She said the industry must help rather than hinder consumers with the information it provides and that key features were not meant to be a “picnic for the compliance department”.

We now have a number of point-of-sale literature consultations around, including the new “throw away all the existing key features or key facts documents and replace them with a quick guide at the point of sale”.

The quick guide must be a stand-alone document at the top of the marketing pack, be produced in a tabular format containing numbered questions and bull- eted answers, be no longer than two sides of paper and include the FSA’s key facts logo and regulatory message.

Further consultation on the disclosure of charges should appear next March, a few weeks before pension simplification goes live. Think about the implications on the marketing of pensions and other regulated products.

One of the big three life and pension providers estimates that more than 700 pieces of pension literature need to be rewritten and reprinted for pension simplification alone. Where is the remainder of the key facts information to be placed when we slim down to the quick guides?

I believe a discerning consumer who receives a quick guide document will be given information that they will probably already know from their own research. They will have to refer to another set of documents giving further information about the provider’s product and the range of fund choices.

When consumers shop around to compare products from different providers, they will find little difference in cost. The financial strength and brand of the provider and levels of service and delivery will be deciding factors.

As we wade through the FSA’s simplified prospectus requirements for investment funds, that will put us on an even playing field with fund disclosure in Europe, the pressure is on copywriters, designers and print and production personnel – especially as the timescales for the implementation of the prospectus following the final rules is shorter in time than any literature requirement I have seen in my 25 years in financial services.

It is not just the City watchdog that is consulting on literature. The ABI has issued a consultative pack to insurers to help them ensure that the marketing of pensions and life products is clear. A final paper is due this autumn. It never stops.

Many of the new documents under consultation add to the information a client receives at the point of sale. Clients will receive at least 10 separate items in many cases before buying a product.

The research shows that 30-somethings in the UK are stuck in a state of “financial adolescence” in which they spend recklessly without worrying about debt. This is the view of their parent’s generation, according to Axa’s Children of 1970 report.

More than a quarter of the sample said they are troubled by their lack of saving and 56 per cent try to save but cannot manage to save on a regular basis. We need to help people save, not put them off with mountains of information.

The internet is proving to be the first port of call for searching for many products, with 20 million UK shoppers estimated to have spent 17bn online alone in 2004. I have just set a number of basic life and pension-related questions for financial marketers to research on Google. The results were frightening due to the lack of quality financial advice on the web available from providers.

The sooner we educate and e-enable those who want to start saving and protect them- selves and their families, the better it will be for everyone.


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