In an open letter to the FCA’s director of strategy and competition Christopher Woolard, AJ Bell co-founder and chief executive Andy Bell urged the regulator to ‘be bold’ and overhaul the framework for disclosure requirements.
The current requirements see investors blinded by the sheer amount of information presented to them, often running to 30 pages, which ultimately could increase disengagement and lead to poor investment and retirement decisions, Bell added.
In the letter, he wrote: “We appreciate the regulator’s role must strike a balance between informing consumers and protecting them. But the current disclosure rules were created in a different era and without serious consideration of how they interact with each other.
“The pension freedoms have redrawn the retirement landscape, and Brexit has the potential to give the UK greater control over setting its own rules in some areas.”
At the point of sale a UK investor would typically receive a suitability report, a key features illustrations report, a key investor information document and a transfer value analysis (TVA) or new transfer value comparator (TVC).
It is time to strip back disclosure requirements and undertake a “root and branch” review of point-of-sale documentation, rather than the individual consultations run by the FCA over the documents which only tackle one problem at a time, Bell said.
“The overarching aim of this project should be simplification. Ideally we would like to see a reset of the regulatory approach to disclosure so that, rather than adding layers to a broken model, the FCA builds a new framework that savers can really engage with,” Bell wrote.
“In doing this, the FCA should be bold. Can we, for example, get the majority of information a retail investor needs onto a single page document? Clearly this would be a challenge and people should have access to additional information should they want it, but for the majority of people we believe this radically simplified format would suffice.”
