R.I.P. must not become the new reality of K.I.D. warns Consumer Panel

Consumer Panel Vice Chair Kay Blair has today urged European regulators not to let indecision and a lack of clarity lead to the early demise of the key information document (KID). Kay was speaking at the joint European Supervisory Authorities (ESAs) Consumer Protection Day conference in Paris.

The Panel has been following the development of the PRIPs and IMD II legislation closely and supports the principle of a KID. Effective disclosure is good for consumers as it helps them to make informed choices about financial products. However, the Panel is increasingly concerned that indecision over the purpose, scope and objectives of the KID, together with the inclusion of ever-more features, are in danger of diluting the KID’s purpose to such an extent that it becomes unworkable.

The Panel has also warned about over-reliance on disclosure at the expense of other aspects of consumer protection. It has also stressed the need for consistency between MiFID II, PRIPs and IMDII so that different rules don’t cause consumer confusion and regulatory arbitrage.

Kay Blair, Consumer Panel Vice Chair commented:
“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.

However, 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.”

Notes to editors

1. Biographical details for Kay Blair and photographs in a range of resolutions are available on our website: http://www.fs-cp.org.uk/about_us/kay_blair.shtml[1]
2. The Consumer Panel is a statutory body under the Financial Services Act 2012. It was initially established by the Financial Services Authority in December 1998. The Panel advises the FCA on the interests and concerns of consumers and reports on the FCA's performance in meeting its objectives.
3. The Panel’s membership is drawn from a broad range of backgrounds with expertise including market research, law, financial services industry, financial inclusion, European Regulation, financial regulation, consumer advice, campaigning, communications, compliance and later-life issues.
4. The emphasis of the Panel's work is on activities that are regulated by the FCA, although it may also look at the impact on consumers of activities outside but related to the FCA's remit. More information about the Panel's work is available here[2].