FSA To Simplify Guidance On Investment Disclosure

by Jason Gorringe Tax, News.com, London

28 July 2008

The UK's Financial Services Authority (FSA) confirmed on Friday that 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 guidance document 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 provide 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 6th August 2008, it revealed.

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.

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

"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."

He continued: "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 revealed that it will be putting transitional arrangements in place to enable firms to continue using the Menu and IDD until 31st August 2009.

This will allow firms to exhaust their existing stock of documents, and will give them time to consider the disclosure option that best suits their business model, the regulator concluded by explaining.

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