Smarter Consumer Communications: Removing ineffective disclosure requirements in our Handbook
In October last year, the Financial Conduct Authority (FCA) produced policy statement PS16/23, ‘Smarter Consumer Communications: Removing ineffective disclosure requirements in our Handbook’, which outlined a number of changes it would be making surrounding communications.
The FCA’s ‘Smarter Communications’ initiative looks to improve not only the way in which consumers are communicated with, but also the way in which the regulator itself communicates with stakeholders
The requirement to produce a Consumer Friendly Principles and Practises of Financial Management (CFPPFM) was removed on 22nd November 2016
The SCDD and CIDD templates have also been removed from the FCA’s handbook
The Consumer Friendly Principles and Practises of Financial Management (CFPPFM) was introduced in 2005, and was designed to give both potential and existing with-profits policyholders clear and understandable information about with profit policies. It did this by presenting the relevant information included in the full Principles and Practices of Financial Management (PPFM) in a clear and simple way. Based on feedback received, the FCA has decided to remove the requirement for firms operating with-profit business to produce a CFPPFM. The requirement to produce this document was removed on 22nd November 2016.
"The FCA expects all firms to communicate in a way which is clear, fair and not misleading and to consider the information needs of their customers."
The FCA rules require insurance, home finance and investment firms to disclose information about their services, associated costs and the firm’s status. The FCA Handbook includes templates of the IDD and CIDD, which firms can use to disclose this information. The IDD template covers circumstances where just one service is being provided to a consumer and the CIDD is an expanded template where a firm covers more than one market (mortgages and insurance). COBS currently includes a template for the Services and Costs Disclosure Document (SCDD). This brings together the key information about services in the IDD and information about the cost of services in one document. The SCDD is similar in style to the IDD but less prescriptive about the cost of services, giving firms greater flexibility to explain the cost of their services.
The regulator made the decision to remove the SCDD and CIDD templates from the handbook. A firm can choose to continue presenting the information in the same way as in the templates, but will no longer be able to use the Key Facts Logo once the new rules come into force. The new rules will come into force on the 27th March 2017. The FCA expects all firms to communicate in a way which is clear, fair and not misleading and to consider the information needs of their customers. This includes ensuring important information, such as the scope and cost of a service, is made clear.
Liz Coyle is Compliance Policy Manager at The SimplyBiz Group