In Jane Austen’s Emma, during the rather bad-tempered picnic to Box Hill, mischief-making Frank Churchill addresses the assembled party. He asserts that Miss Emma Woodhouse wishes to be entertained and so demands from each of them ‘one thing very clever! or two things moderately clever; or three things very dull indeed.’
Mr Frank Churchill’s highly questionable motivations aside, this raises the question of who wouldn’t prefer to read one very well written, to the point and engaging item instead of two not so good or three truly impenetrable items? We all would, wouldn’t we? It’s common sense.
Sadly, the financial services industry as it currently stands is heavily weighted to the ‘three things very dull indeed’ end of the scale when it comes to disclosing information to customers. This is largely symptomatic of providers being unclear on what exactly is required of them by the regulator and throwing everything at it bar the kitchen sink to be on the safe side.
An unfortunate consequence is that consumers are deterred by this wall of words. Multiple, lengthy documents to cover even simple products with additional charging structures and key features are overwhelming. The end result is that these documents are either skimmed (at best) or quietly ignored, meaning investors are not making informed decisions and are at risk of detriment.
But, this could be about to change for the better.
One of the main issues addressed by Guidance Consultation 14/3 (GC 14/3) is the provision of information about financial services to customers. As part of this work the FCA commissioned research into how customers experience and engage with this information.
The outcome confirmed what we already know (but validation is always nice): customers want
- the – must know – facts in easily digestible nuggets of plain English
- a clear and consistent format for – must know – facts and for charging to help comparisons
- telephone support, with easy to find details
- clear information at purchase on recourse
- reminders of the key points of purchase before the final decision is made
This resonates with much of what we’ve been saying for a while about how providers present information to customers and we know we’re by no means alone in this. We’ve been looking at the direct investment market rather a lot of late (but we’ll come back to that) and have seen a mixed bag indeed but no-one who really seems to quite hit the mark.
The FCA plans to work with providers to understand why they do not communicate with customers in a more accessible way, then establish the role that the Handbook plays in this. This is a big thing; a bold move and heartening to see.
While the FCA isn’t exactly putting its hand up to drowning accessible investor disclosure in a bucket of COBS rules, the good souls at Canary Wharf must know that they’re going to take what’s referred to in the field as – an absolute kicking – from pretty much everyone they speak to. And that will have to be reflected in the eventual consultation paper.
The aim is to remove the ambiguity and give firms confidence to choose between belt and braces in terms of content. A consultation will follow later this year which could, potentially, see the end of certain (unspecified) disclosure rules which are not benefiting customers.
Emma is a matchmaker but I’m not convinced even she could plan a happy union between the FCA, advisers and providers. It could be a step in the right direction though and the first step on the inevitably lengthy journey from three things (T&Cs, KFDs and charging structures for example) very dull indeed to one thing very clever.
Which brings is neatly back to our having been busy in all things direct lately. No spoilers but we’ve been busy and we’re going to be making quite a lot of noise about it in the next few weeks. Eyes peeled and ears perked!