The FCA has been doing background research over the past couple of years around the effectiveness of firms’ communications with clients. You can read more on this work here.
The research has led to the publication of guidance on a number of areas, not least around how firms can improve the effectiveness of suitabillity reports, making them shorter yet clearer.
The FCA has also concluded that some changes are required to the way that firms disclose information on services and costs. Specifically, the current templates for IDD, CIDD and SCDD will be removed from the FCA handbook with effect from 27 March 2017.
These templates have been used pretty much ‘as is’ by many firms as an easy way to ensure that all required disclosures are made. However, the templates were intended as guides to an appropriate structure and firms were expected to personalise the templates rather than slavishly follow the content. Firms have been permitted to present the required disclosures in an entirely different way, the only condition being that they could not then use the Keyfacts logo on documents that were structured in a different way to the templates.
It is undoubtedly the case that the templated documents always looked ‘compliancey’ and made every firm using them look boringly similar to clients, or maybe just boring! So, those firms that have created their own bespoke disclosure documents probably stand out from the crowd better and also present the required information in a way that clients relate to and understand better.
It is important to understand that there are no changes to what firms must disclose – the removal of the templates is simply intended to encourage all firms to create their own bespoke versions instead of relying on the template structure. So firms that still use the template based disclosure should consider how best to present the required information following the withdrawal of the templates on 27 March 2017.