A survey of UK advisers by the platform provider found that 61% agreed that KFIs do not achieve their objective of explaining to clients the charges they will pay and the benefits they will receive from the products they are investing in.
Mackay said: “As an indicator of the impact of charges, KFIs are the worst possible example of information over load, often running to 10 pages or more of impenetrable numbers.
“In terms of demonstrating what you might get back from an investment – the only thing you can guarantee in a point of sale key features illustration is that the customer will not receive what the illustration says.”
FAMR
AJ Bell welcomed the Financial Advice Market Review’s (FAMR) view in March that there is scope to improve the quality of, and shorten the time spent on, suitability reports and make them more consumer accessible.
However, it was disappointed that the review didn’t go further.
For the FAMR to achieve anything in this area, it needs to un-pick all the pieces of information and documentation people receive during the sales process and work out what people really need to know, the firm said.
Keep it simple
Mackay said: “We’d like to see the scope of the FAMR extended to ensure that KFIs are reviewed alongside suitability reports. Any replacement must involve a much simpler set of product features and costs outlined in a manner that the ordinary person in the street will have a fighting chance of understanding.
“FAMR should be an opportunity to improve access to financial advice in the UK and deliver better outcome to consumers. Unfortunately, as it currently stands the FAMR is a generic set of observations with very few clear actions that are going to help achieve those objectives.
“Expanding the review of suitability reports to encompass key features illustrations and finding a better way of helping people compare costs and charges more accurately would be real progress.”
