James Daley

By James Daley

The complexity and impenetrability of terms and conditions documents has been one of the elephants in the world of financial services for many years. Everyone knows that most Ts & Cs don't make any sense at all to the average customer - but given that their competitors' documents are just as bad, they choose to put the hard work off.

For too long, the regulator has also been happy to ignore the problem. In fact, it used to have rather a nasty habit of making things worse, by telling companies exactly what they needed to send their customers, and how it needed to be presented.

One of the many problems with prescriptive regulation is that companies feel they can safely cling to it. To my mind, you get much better results if you keep regulation broad, and focused on key principles and outcomes. Companies tend to hate the lack of certainty this brings - but regulation is not designed just for them, it is designed to protect the interests of their customers.

What used to be "compliant" soon won't be

The good news is that the landscape has been rapidly shifting over the past decade. The introduction of the "Treating Customers Fairly" principles was a landmark step - but it's only been under the Financial Conduct Authority (as opposed to the Financial Services Authority) that we've really seen TCF start to come into its own.

Last week, the FCA issued a new discussion paper consulting on its plans to tear up a set of rules which force companies to produce specific documents for their customers. Specifically, they're looking to do away with: the "Consumer Friendly Principles and Practices of Financial Management" (a document sent to customers of with-profits bonds); the Short Report (a twice yearly document sent to investors in certain investment funds); and the Initial Disclosure Document (which is sent out to people when they buy general insurance).

The best part is the news that they plan to scrap the mandated use of the "Keyfacts" logo - which gets printed on all sorts of financial documents, and means nothing to most consumers.

Smarter Communications

This is another clear signal that this regulator means business when it comes to getting companies to communicate clearly with their customers. As its Smarter Communications Discussion paper, published in June, made clear - the FCA is no longer going to stand aside and accept that it's ok to present information to customers that makes no sense to them. And to show its commitment, it's tearing up parts of its own rulebook to ensure that its own regulations don't get in the way.

Fairer Finance spends a lot of time talking to companies about simplifying their documents - but few seem to have twigged that clear documents aren't just a nice to have, they are a must-have without which they are not compliant with Treating Customers Fairly.

We're 100% per cent behind the FCA on the work its doing in this area - and are looking forward to being able to share some of the clearer documents that we have rewritten for companies next year. It is possible to put complex Ts & Cs into plain english. Most companies haven't even tried.