Financial Conduct Authority
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FSA to simplify guidance on investment disclosure

The Financial Services Authority (FSA) has today confirmed it will further simplify how investment advisers can ensure they provide consumers with clear and simple information about costs and services.

In February, the FSA proposed introducing a single document in guidance to replace the Menu and Initial Disclosure Document (IDD). This followed the launch of the FSA’s new investment conduct of business regime (COBS) in November 2007, which introduced a more principles-based approach to disclosure, giving investment advisers flexibility over how they give information to consumers at the point of sale.

In response to supportive feedback, the FSA will build on COBS by introducing the new Services and Costs Disclosure Document on 6 August 2008. It will combine in one document key information about a firm’s services and costs, and provide firms with greater flexibility to explain the cost of their services in their own words. As guidance, it will be one way for firms to meet COBS disclosure requirements – although firms will be free to develop their own material in order to comply.

Andrew Sykes, head of retail investment policy at the FSA, said:

"Our emphasis on more principles-based regulation means focusing on the outcomes that matter, and giving firms the freedom to meet these outcomes flexibly. This new material builds on the guidance that currently exists and will further simplify investment disclosure. It aims to help firms provide key information in a more streamlined way to help consumers better understand the services being offered, and the cost of those services.

"Firms will be able to use the new document to meet COBS disclosure requirements – but firms will also be able to develop their own material to meet these requirements and provide effective and clear disclosure to their clients."

The FSA will be putting transitional arrangements in place to enable firms to continue using the Menu and IDD until 31 August 2009. This will allow firms to exhaust their existing stock of documents and give them time to consider the disclosure option that best suits their business model.

Notes to editors

  1. Policy Statement PS08/7: ‘Simplifying Disclosure: Information about services and costs – Feedback on CP08/3 and final Handbook text’.
  2. Consultation Paper CP08/3: 'Simplifying Disclosure: Information about services and costs', was published on 19 February 2008.
  3. The FSA recognises the potential link between disclosure and the Retail Distribution Review (RDR). While the final shape of the RDR remains to be determined, the new disclosure document has been designed to take account of the broad RDR direction. The RDR Feedback Statement will be published in October.
  4. Before the FSA's new investment Conduct of Business Sourcebook (COBS) came into force, firms were required to give customers the Menu and Initial Disclosure Document (IDD) on first making contact with a view to giving advice on packaged products. The IDD includes information about the services a firm offers and the Menu contains information on how the firm is to be remunerated. When COBS came into effect on 1 November 2007, the FSA placed the Menu and IDD in guidance.
  5. Further information on COBS can be found in Press Notice 111/2007.
  6. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
  7. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.

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