Another massive regulatory upheaval among financial advisers is in the offing next year when the rules for the so-called menu card (CP166) full commission disclosure are published.
A full policy statement on CP166 is due in April 2004 but it is already clear that the FSA-favoured approach is to offer consumers a detailed comparison of costs which includes the maximum that a policyholder will pay in commission and fees for all FSA-regulated products via monthly and annual contributions.
This maximum figure will be quoted alongside a market average figure.
A third column will include an illustration of how much commissions and fees will cost based on a specific sample contribution.
All this information is due to be included within new key facts documentation which will also need to be completed and rolled out in the next 12 months.
Providers are likely to be working on the commission disclosure section of their shiny new key facts documents from early next year and there will be great deal of work needed to link them to calculators and databases which will provide an accurate reading of all fee and commission-based costs based on the amount that is being paid into a specific plan and its payment schedule. In short, CP166 requirements will add an additional burden on providers and advisers in terms of data collection, analysis and display.
In view of the timescales, the only real option for providers will be to automate the supply of these complex commission illustrations and push for key facts to be processed electronically along with other new business documentation.
Some IFAs are likely to be looking for a new computer this Christmas.