The FCA is set to consult on whether consumers accessing products directly and those using a third party such as a platform should be given the same information and rights.
According to the 13-page consultation paper CP15/20, Investing in Authorised Funds Through Nominees, the Conduct of Business Sourcebook 14.4 rules – which were due to come into effect in December and would require intermediate unit holders to pass on certain notifications to investors – are no longer needed and should be revoked.
The original proposals, issued in 2011 by the then-FSA, intended to give consumers who invest in funds on an intermediated basis – that is, through a nominee account – the same rights as those who invest in funds directly, with the same amount of disclosure.
In 2013, the FCA put these plans on hold until December 2015, while it consulted on how to work around some of the problems in implementing these changes to COBS 14.4.
However, the FCA has now said it has concerns over the effectiveness of the original disclosure rules, which relate to notifications to beneficial owners about short reports, unit holder voting rights and other fund information. Instead, the regulator will consult over whether the rules should be scrapped in favour of better, more effective consumer communications.
The FCA said: “We are planning two separate pieces of work that are likely to affect the rationale for most of the COBS 14.4 rules.
“We will publish a discussion paper on improving firms’ communications with consumers shortly and will begin a market study on asset management later this year.”
As part of this work, the FCA said it was committed to consulting on removing requirements to produce disclosure material it did not believe benefited consumers.
The discussion paper also asks for respondents’ input on whether consumers accessing products directly, and those using a third party such as a platform service provider, should be given the same information and rights in order to have a level playing field.
“Alternatively, there may be specific issues which need to be addressed for investors holding their units through an intermediary”, the paper said.
Adviser view
Graeme Inglis, director of Kirkcaldy-based Create and Prosper Financial Services, said: “Sometimes it can be difficult to differentiate as a consumer what level of investment information is important and what is not important, but a financial adviser will be able to assess that by analysing the client’s needs.”
