Calls for review as TISA urges FCA to simplify disclosures

The Investing and Saving Alliance (TISA) has called for a broad review of consumer disclosures following its submission to the Financial Conduct Authority (FCA) on proposals concerning Consumer Composite Investments (CP25/9).

TISA's response identifies the current disclosure regime as "confusing and overwhelming" for many consumers, arguing that the existing approach can prevent individuals from accessing the information needed to make informed investment decisions.

In its detailed comments, TISA spokesperson Sophie Legrand-Green said: "Whilst this consultation is welcome, we cannot help but feel it represents a missed opportunity to create a consumer disclosure regime which builds the confidence and knowledge of UK consumers."

She added: "Many find these reporting documents confusing and overwhelming, leading them to miss out on valuable information which could support them to make better informed decisions. We need to ask ourselves what consumers need to make decisions, and how this can be presented in an accessible way that consumers can read and understand. This could be through increasing consistency across retail investments and pensions, recognising that consumers are more likely to understand and engage with a reduced amount of information in a Product Summary and enabling greater opportunities for innovation."

The FCA's consultation seeks industry feedback on changes to the way information about Consumer Composite Investments is provided. TISA's submission outlines several key recommendations intended to improve the proposed approach and provide consumers with clearer, more usable data.

One recommendation involves aligning the disclosure requirements with the new consumer duty, with the aim of supporting informed decision-making. TISA advocates for a "single source" method, which would reduce overlapping and repetitive regulatory documents presented to consumers. This, TISA argues, would ensure that only the essential information for decision-making is provided, potentially simplifying the Product Summary by prioritising the most necessary content.

Another proposal suggests incorporating explicit transaction costs into performance disclosures, rather than including them in costs and charges disclosures as the FCA has proposed. TISA believes that by including these costs within performance figures, there is a lower risk of consumers "double-counting" and making choices based on a misapprehension of actual charges.

TISA also advocates for further amendments to the proposed rewrite of Article 50. The group notes that, under the current rewrite, consumers would receive three separate cost disclosures, each showing similar information in different ways and with differing figures. TISA believes a more consistent approach to these disclosures would help reduce confusion and improve consumer confidence by presenting the information in an intelligible and accessible format.

On managing the transition to the new disclosure regime, TISA has called for a two-year transition period, applied consistently across all Consumer Composite Investments and with a universal adoption date. According to the group, this would minimise consumer confusion and allow firms sufficient time to manage the necessary operational changes required by the new rules.

Legrand-Green said: "We support the FCA's objectives which underpin this consultation, and we believe there are several opportunities to improve consumer understanding presented in this consultation. However, we urge the FCA to consider conducting a more comprehensive consumer disclosures review, which will allow the regime to be moulded in a way which empowers consumers and supports firms."

She continued: "We look forward to supporting the FCA as they continue this work, and encourage them to adopt a collaborative approach as seen during the ongoing Advice Guidance Boundary Review."

TISA represents around 270 member firms across the financial services sector, including investment managers, retail banks, pension providers, wealth managers, and other industry stakeholders. The group has stated its focus is to deliver improved outcomes for consumers by fostering collective approaches to regulatory challenges.