But the number of items that the FCA has decided are ‘key’ does mean the client will be presented with an awful lot of figures on the front page of their KFI, possibly crammed into the one single page allowed.
It is also questionable whether non-advised clients will fully understand what terms like ‘reduction in yield’ and the associated figures really mean. Advised clients can lean on their adviser to explain further if they don’t understand any of the figures or terms.
A final area of concern held by some in the industry is that clients may be confused by any difference between the projection of the first year’s charges that will form part of the summary key information and the retrospective annual disclosure of charges in pounds and pence that will become a requirement as part of the changes to annual drawdown statements that the FCA will introduce from August 2020.
In the KFI, clients will be presented with an estimate of charges in the forthcoming year which will have to be based on assumptions around investment activity and performance.
In the annual statement, on the other hand, the client will be given details of the actual charges paid in the last 12 months.
It is very unlikely these figures will ever be identical, something which will undoubtedly confuse some clients.
The regulator has already confirmed it is planning to review the effectiveness of the measures it is introducing around a year after the Retirement Outcomes Review has been implemented, so this review is unlikely to take place any later than August 2021.
If the volume of information contained in the summary key information does prove a little too daunting for clients, or they are confused by some of the figures, this review may provide an opportunity for the FCA to rationalise the details a little further.
Gareth James is head of technical at AJ Bell
