Martin Wheatley, Financial Conduct Authority chief executive has revealed concern over the way terms and conditions and disclaimers are presented in disclosure documents “that are longer than Hamlet”, which could prevent consumers making “rational decisions”.
Speaking to the Investment Management Association (IMA) at Mansion House in London, Mr Wheatley said the new City watchdog is questioning whether disclosure really is the key to ensuring consumers are in full knowledge of the facts relating to an investment.
Mr Wheatley said: “Do consumers genuinely pore over terms and conditions that are longer than Hamlet?”
In the past week the FCA has forced two providers, Clerical Medical and Equitable Life, to amend the wording on forms of authority and payment instruction forms respectively, as both were deemed to be “unfair”.
Mr Wheatley also said the FCA was taking a much more active interest in insights it can gain from newer disciplines like behavioural economics, as the FCA seeks to ensure it can help markets to operate more effectively.
On the subject of the new regulator’s more intrusive approach, far from being an extra financial burden, he said this method should save the industry money.
He said: “People have worried a little about this more intrusive form of regulation.
“But when faced with the prospect of early intervention – such as our position this week on unregulated collective investment schemes (Ucis) or our statement last month on interest-only mortgages – people will take that every time over the clean-up bill from problems not dealt with early.
“The clean-up bill for payment protection insurance (PPI) will pass £10bn this month.”
