On September 28, the UK Financial Services Authority (FSA) published a paper on industry good and poor practice in the preparation of Key Features Documents (KFDs). After reviewing over 200 KFDs from a variety of UK firms, the FSA found that only 15 per cent of the sample KFDs met the FSA’s requirements to ensure that information is communicated to clients in way that is clear, fair and not misleading.
The FSA’s main areas of concern included: explanations of risk, product charges, general product information and their objectives. Firms are now expected to review their KFDs by December 2008 and to make any necessary changes. The FSA will consider enforcement action where appropriate and intends to sample a sub-set of these KFDs again in November 2008 and to repeat the full review in 2010.