FCA proposes simpler investment cost disclosures

The Financial Conduct Authority (FCA) is proposing to simplify how platforms, advisers, and wealth managers communicate the costs of investing.

This initiative aims to bring all investment cost disclosures into line with previous product disclosure reforms, creating a more consistent framework for firms.

The goal is to provide customers with clearer, more useful information, enabling them to compare products more easily and invest with greater confidence.

The FCA highlights that consumers often struggle to understand investment costs and their impact on returns; for instance, 30 percent of non-advised platform users reported not knowing how much they are charged.

To address this, the FCA is consulting on simplified rules for how firms communicate all costs involved in investing, including products, distribution, and advice.

Under the proposals, distributors would present their own costs alongside product costs, consistent with the Consumer Composite Investments (CCI) format, and regularly account for the total cost of investing.

The framework also covers firms' disclosures to consumers regarding fees or interest on client cash.

The proposed changes are part of the FCA's wider work to foster a resilient and competitive consumer investment market.

From June 2027, firms must adhere to the FCA's Consumer Composite Investments (CCI) rules, finalized last year, which mandate new ways of explaining investments to consumers before purchase.

Supporting this, the FCA today published results from its review of current pre-sale disclosure documents.

The review found that out of 132 documents examined for readability, only 6 percent were written in plain English.

All documents reviewed were more complex than GCSE level.

The FCA will continue to work with industry to embed the CCI rules, ensuring consumers receive clear information for better-informed investment decisions.