UK FCA consults on simplifying consumer investment disclosures

The UK Financial Conduct Authority (FCA) has published consultation paper CP26/24 proposing reforms to streamline consumer investment disclosure requirements across the Markets in Financial Instruments Directive (MiFID), Insurance Distribution Directive (IDD) and non-MiFID investments business. The proposals would align cost disclosure requirements with the Consumer Composite Investments (CCI) regime, which replaced the prescriptive requirements in the Packaged Retail and Insurance-based Investment Products and Undertakings for Collective Investment in Transferable Securities disclosure documents with a new CCI "product summary". The regime allows firms flexibility over how they present information in line with the consumer duty.

Following a review of MiFID derived requirements, the FCA intends to make changes to align Conduct of Business Sourcebook (COBS) disclosure rules with the CCI regime on a conceptual and technical level, and apply the same duty-driven approach, focusing on consumer engagement and understanding.

Proposals include:

• Aligning COBS more closely with the CCI regime and making cost disclosures more consistent throughout the investment journey, so that the pre-sale presentation of product costs aligns with the CCI disclosure framework.
• Removing the MiFID-derived cumulative effect illustration pre-sale and post-sale and instead requiring firms to show how costs have impacted returns in regular post-sale reporting.
• Allowing firms to use CCI cost categories in regular post-sale reporting, while still requiring consumers to be told the total costs they have paid in pounds and pence.
• Removing most prescriptive requirements for business with professional clients while retaining firms' obligations to provide transparent cost disclosures and other core information.
• Embedding FCA expectations that consumers are clearly informed about the interest rates received on their cash balances or any fees paid on cash held in investment accounts, and that firms explain in a consumer-friendly way how they set that rate. The FCA is also codifying a requirement that firms do not both charge fees and retain interest on cash holdings (double dipping).
• Simplifying rules for MiFID, IDD, and non-MiFID business to reduce burden and ensure a more consistent consumer experience, recognising that the co-existence of three similar but distinct regimes increases complexity.

The deadline for comments is 21 August, with the FCA intending to publish final rules by the end of the year. The FCA also published its multi-firm review findings on how well pre-sale investment disclosure documents work for consumers before the CCI regime comes into force on 8 June 2027. The review will be repeated in 2027 to track progress.

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