UK watchdog plans to simplify investment information, in shift from EU

LONDON (Reuters) - Britain plans to simplify often complex and unclear documentation handed to investors to boost confidence and drive investments, in what one lawyer called the biggest shift to date from European Union retail regulation.

The Financial Conduct Authority (FCA) said on Thursday it wanted to replace current investor information with a simpler and more flexible system tailored to Britain - and give firms more choice about how, what and when they communicate.

Under current rules introduced across Europe when Britain was an EU member, people buying investments, such as funds and structured products receive standardised documents covering prescribed information, which could put them off or lead to less informed decision making, the FCA said.

Jake Green, global head of financial regulatory at law firm Ashurst, said although the proposals would lead to a "material divergence" between British and EU firms, they should lead to more relevant consumer information.

"This ... marks the biggest shift from EU (pre Brexit) retail regulation to date and is a real example of outcomes focussed regulation," he added.

The consultation, which ends next March, follows a government plan to replace disclosure requirements in the EU's Packaged Retail and Insurance-based Investment Products (PRIIPs) regulation and the Undertakings for Collective Investment in Transferable Securities (UCITS) with a more flexible approach that benefits consumers.

The FCA did not give specific examples. But critics have said the PRIIPs Regulation, for instance, places an undue burden on firms, which can then restrict access to some retail products, while leading to information being presented to investors in an unhelpful or misleading way.

Lawyers have also pointed out that the vast majority of retail investors do not read regulated, pre-contractual fund disclosure documents while a "one-size fits all" approach is not targeted at helping consumers.

"We want to ensure that firms can communicate with their customers in a way that gets them the information they need when they need it," said Simon Walls, interim executive director of markets at the FCA.

"High quality product information will give consumers the confidence to invest; increased participation in this market will not only benefit consumers but will also provide capital to drive the economy and boost growth."

(Reporting by Kirstin Ridley; Editing by Tomasz Janowski)