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Report: improve investment transparency to avoid selling unsuitable products



Global investment association the CFA Institute has called for a greater transparency in investment products, claiming that there is currently “poor disclosure” to investors.

The calls come as part of a report which looks to improve consistency in practices across the UK within the investment sector. It says that amid widespread mistrust of the industry, investment management firms should increase the transparency of their products, claiming this would help investors making more informed decisions.

The report recommends key policy development areas, covering costs, risks and performance.

Rhodri Preece, author of the report and director of capital markets policy at CFA Institute, said, Investment professionals have raised concerns about sales practices associated with investment products, a problem that has been exacerbated by poor disclosures. Currently, the disclosures provided to investors in [packaged retail investment products] are often complex, lengthy, incomparable, and inconsistent among EU member states.”

He added, “Improving product transparency, when combined with other measures addressing sales practices, can help mitigate the risk of investors purchasing unsuitable products.”

Wealth advice firm AXA Wealth was recently fined £1.8m following an investigation by the Financial Conduct Authority (FCA) for failing to provide sufficient advice to its customers on the risks, and for not implementing measures to ensure customers could cope if their investments were lost.

The FCA said that AXA had fallen short in helping its customers, many of whom were “elderly, retired and financially inexperienced.”

Further reading:

Transparency, simplicity and honesty is urgently needed in investment

Fewer financial projections by FTSE 100 firms in wake of 2008 crisis

Responsible investors need to let the light in

We need investment to return to its ‘patient evolutionary path’

Revised sustainability framework looks to cut out ‘tick box reporting’


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