FCA wants the information provided to investors to be clearer and more helpful

Recently, regulators around the world have seen an increase in companies that are providing inaccurate or misleading information, which led to several of them getting fined.

In fear of the companies’ compliance violations and poor data accuracy becoming a norm, the UK’s regulatory body, the Financial Conduct Authority (FCA) decided to act. It published a discussion paper involving primarily the quality and transparency of information provided to retail investors. The regulator’s goal is to ensure that this data will become more transparent, clearer, and of greater quality so that investors would have their best chance at making proper investment decisions instead of relying on false data.

At the moment, the standards involving the clarity and accuracy of information exist in rules called Packaged Retail Investments and Insurance Products. The framework, also known as PRIIPs, is also joined by the Undertaking of Collective Investment in Transferable Securities regulations. These rules have existed since the time when the UK was still a part of the EU. Now, however, the FCA decided that it was time to change them and introduce a new regime.

What is the new regime imagined to be like?

The regulator discussed the idea of the new framework, noting that it needs to be specially tailored to the needs and the condition of the local investment market. It also needs to offer data that would allow retail investors to make fully informed decisions. It is required that it offers information on costs, risks, commissions, and more and to ensure that it is easy to access and as clear as possible.

In addition to that, the FCA also considered who should be responsible for preparing disclosures. It believes that the information is important, but the way it is presented might be even more crucial in order to shine a light on the risks and opportunities.

The FCA’s Executive Director of Markets, Sarah Pritchard, said that the existing rules are making it difficult for investors to find the required information that would actually be helpful to them. However, the regulator now has the flexibility to change the situation by designing a new regime. This new regime would be less rigid, while focusing more on the desired outcome. Essentially, they want consumers to have enough confidence to invest and understand the levels of risks that come with it.

For the time being, the regulator will wait for proposals and comments on the idea, until March 7th next year.