The FCA is proposing to simplify how platforms, advisers and wealth managers communicate the costs of investing while reminding firms to communicate with consumers about investing in plain English.
The move will bring all investment cost disclosures into line with previous investment product disclosure reforms[1] and create a more consistent framework for firms to give customers clearer, more useful information.
The proposals will allow firms to innovate, test and compete to inform and engage retail investors, communicate clearly in plain English, not jargon and give information in engaging ways. This will also help consumers compare products more easily and invest with greater confidence, supporting a stronger investment culture.
Consumers struggle to understand investment costs and their impact on returns, for example, 30% of non-advised platform users said they did not know how much they are charged for investing.
To help give consumers a clear and balanced understanding of costs and charges, the FCA is now consulting on simplified rules[2] for how firms communicate all the costs involved in investing, including products, distribution and advice.
Under the proposals, distributors would present their own costs alongside product costs consistent with the Consumer Composite Investments (CCI) format when selling products, and account regularly for the total cost of investing.
The proposals also cover firms’ disclosures to consumers when they charge fees or pay interest on client cash.
Lucy Castledine, the FCA’s director of consumer investments, said: 'We want more consumers to feel confident investing by getting clearer information in plain English on products and charges.
'The changes will give firms more freedom to innovate and communicate in ways that build trust and support informed decisions to help consumers navigate their financial lives.'
The changes are part of the FCA’s wider work to support growth by creating a consumer investment market that is resilient, competitive and better for firms and customers.
Review of disclosure documents
From June next year, firms will need to follow the FCA’s CCI rules[3], which were finalised last year. This means they must change how they explain investments to consumers before they buy.
To support firms making this change, the FCA has also today published the results from its review of current pre-sale investment disclosures documents[4], which will need to be updated as firms embed the CCI rules. The review found that of 132 examined for readability, only 6% were written in plain English.
It also looked at these and a further 40 documents, from firms that both manufacture and distribute products, to see how easy they were to understand. All the documents were more complex than GCSE level.
The FCA will continue to work with industry to embed the CCI rules to make sure consumers have clear information to make better informed investment decisions.
Notes to editors
- People have until 21 August to give their views on the consultation (CP26/24)[2]. These proposals align with the FCA’s expectations under the Consumer Duty and Dear CEO Letter of 2023[5] relating to disclosure of interest on cash and double dipping.
- The review of investment disclosures[4] looked at the readability and intelligibility of disclosure documents:
- Readability: how easy disclosure documents are to read, focusing on sentence length, word complexity, structure and layout
- Intelligibility: how easy disclosure documents are to understand, focusing on meaning, clarity, context and whether the reader can grasp the message
- Consumer Composite Investments (CCI) will replace Packaged Retail and Insurance-based Investment Products (PRIIPs) and Undertakings for Collective Investment in Transferable Securities (UCITS) disclosure documents, giving firms more flexibility to present information in clearer, more accessible ways.
- From June 2027, investment firms will be required to provide genuinely plain English information to help consumers choose products with confidence. The new product information regime is designed to make investing feel accessible to everyone, not just those already familiar with financial jargon.