In words dear to journalists' hearts – and investors – the FCA wants to cut complex language and simplify the way investments are explained to the public. As ever, however, there are criticisms. One commentator said that transparency is not the same as clarity when relatively modest sums are involved.

The Financial Conduct Authority proposes to simplify how platforms, advisors and wealth managers communicate the costs of investing, while reminding firms to explain investments in plain English.

The move, which will bring all investment cost disclosures into line with previous investment product disclosure reforms, will create a more consistent framework for firms to give customers clearer, more useful information, the UK regulator said in a statement yesterday.

The FCA said consumers currently struggle to understand investment costs and how they erode returns. For example, it said that 30 per cent of non-advised platform users did not know how much they were charged for investing.

To help give consumers a clear and balanced understanding of costs and charges, the FCA is now consulting on simplified rules for the way firms communicate all the costs involved in investing, including products, distribution and advice, it said.

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

The proposals also cover firms' disclosures to consumers when they charge fees or pay interest on client cash.

"We want more consumers to feel confident investing by getting clearer information in plain English on products and charges," Lucy Castledine, the FCA's director of consumer investments, said. "The changes will give firms more freedom to innovate and communicate in ways that build trust and support informed decisions to help consumers navigate their financial lives."

Reactions
"Transaction costs need to be disclosed, which will disappoint some industry players. However, these can be presented pre-sale along with a note that these may vary and an illustration of what they were in the previous year. I think this is a sensible approach," Holly Mackay, founder and CEO of Boring Money, said in a note. (Boring Money is a consumer-focused financial website.)

"The regulator has been clear that they want to see fee illustrations in pounds as well as percentages, which I think is really positive. They are also emphasising the need for more personalised statements, requiring firms to show customers post-sale the impact of fees on returns on an ongoing basis.

"The FCA uses the word 'dynamic' in several instances, and this confirms that they want to see more personalised reporting for consumers, which is pretty hard to do in the old-fashioned world of PDFs. Without mandating the underlying technology, the disclosure requirements are heavily leaning towards a more digital, dynamic interface than many firms have today.

"I do have questions, however, about the materiality of some of the proposed disclosures, which will add complexity to disclosures. Transparency is not the same as clarity, and for an investor with a few hundred pounds in cash, wading through illustrations which show the specific cost impact of this is arguably over the top," she said. "Add to this the fact that rates are not static numbers – and add the Treasury's new 22 per cent planned tax on this cash, which landed as this paper was being prepped for print – and this could prove an expensive distraction with little gain. It could feel sensible to apply materiality parameters here, so this is only highlighted for those with large sums or proportions in cash for whom this is a matter of more than a few pounds and pence."

Julia Sage-Bell, senior policy advisor at PIMFA, said: "We strongly support the FCA's ambition to enable firms to communicate information in formats and through channels that best meet consumer needs. Delivering effective consumer journeys under the new regime will require careful design, testing and ongoing refinement.

"We are particularly enthusiastic about the proposed flexibility around the transitional period. Allowing firms to make use of the full implementation window provides valuable time to design, test and refine disclosure approaches, enabling them to focus on presenting information in a way that is genuinely meaningful and useful for consumers.

"Whilst the consultation rightly seeks to give firms greater flexibility in how information is communicated, the proposed disclosures still place significant responsibility on firms to ensure consumers understand a complex and varied set of information," Sage-Bell added.

Timeframes
From June 2027, firms must follow the FCA's CCI rules, which were finalised in 2025. This means that they must change how they explain investments to consumers before they buy.

To support firms making this change, today the FCA has also published the results of its review of current pre-sale investment disclosure documents, which will need to be updated as firms embed the CCI rules. The review found that of 132 examined for readability, only 6 per cent were written in plain English.

It also looked at these and a further 40 documents from firms that both manufacture and distribute products to see how easy they were to understand. All the documents were more complex than GCSE level.

The FCA will continue to work with the industry to embed the CCI rules and ensure that consumers have clear information to make better-informed investment decisions.