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25 June 2013

FCA consumer panel warns against early demise of KIDs

Vice chair Kay Blair urged European regulators at the joint ESAs' Consumer Protection Day conference in Paris not to let a lack of clarity over the purpose of KIDs lead to the disappearance of the document.

She said the panel supported the idea of disclosure which is brought on by KIDs but was concerned too much was thrown at the concept. The ever-increasing number of features attached to KIDs were threatening to water down its purpose to an extent where it would become unworkable, she warned. "An effective KID represents an opportunity to challenge the whole approach to consumer communications. The KID was envisaged as a straightforward standardised guide but is in grave danger of developing into something else. The KID cannot be all things to all men. Regulators need to be pragmatic and decisive to ensure there is clarity around the scope and purpose of these documents. Otherwise, the KID might suffer an early demise", Blair said.

She also warned that the industry should not over-rely on disclosure while ignoring other elements of consumer protection. She stressed that there needed to be consistency between the various types of regulations including MiFID II, PRIPs and IMDII, so that they didn't cause confusion among consumers or regulatory arbitrage. "The KID should not be treated as an end in itself. Although disclosure is an important part of the consumer protection jigsaw it is not a panacea. Consumers need access to straightforward-outcome products. Products must deliver value for money with fair charges; there has to be adequate policing and consumers need access to independent redress systems whose decisions are binding."

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