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FCA discussion paper on consumer communications

CII policy briefing

In July 2015, the FCA published a discussion paper exploring smarter approaches to consumer communications. The regulator acknowledges that many firms are trying to comply with expectations around transparency and information, but sets out several areas where improvement is necessary.

The FCA undertook several strands of research to support discussion paper, including a literature review; roundtable discussions with several key stakeholders; reviews of practices in other countries; and reviews of practices in other sectors, and other research initiatives. The discussion paper then examined six specific areas where there is scope for improving consumer communications:

  • Terms and conditions:typify consumer concerns about information complexity and overload. The DP encourages the industry, working with relevant stakeholders, to focus on bringing about improvements in this area.
  • Fees and charges:the research found that consumers are best able to assess the quality of a product or service and whether it meets their needs when they are fully informed about its key benefits and features.
  • FOS/FSCS:there is more the industry can do to help consumers to identify who is the most appropriate person to speak to when they have a comment or query about a product or service that is not operating in line expectations.
  • General insurance common terminology:the regulator has identified a number of issues in the general insurance market that can potentially be addressed through effective consumer information.
  • Complexity at retirement:consumer inertia and lack of engagement are particularly prevalent when it comes to retirement planning and saving.
  • Investment advice:even post-RDR, there is an opportunity to improve the information consumers receive about the scope and cost of investment advice services to enable them to choose a service according to needs and budget. 

Next steps:

  • The Discussion Paper closes on 25 September, and a feedback statement will be published later this year. The FCA use the responses to this paper, where relevant, to inform ongoing interactions with the EU and domestic regulators on disclosure issues.
  • The FCA will work with firms to test new ideas. The results of this testing, if effective, could inform the regulatory approach, lead to consultation on rulebook changes and could also influence our negotiating strategy when European directives are (re)negotiated.

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