FCA consults on simplifying consumer investment disclosures (CP26/24)

Introduction

On 2 July 2026, the Financial Conduct Authority (FCA) published a consultation on proposals to streamline and modernise consumer investment disclosures. 

The proposals in CP26/24:

1. Align the cost disclosure requirements which derive from the Markets in Financial Instruments Directive (MiFID) with the FCA’s new Consumer Composite Investments (CCI) regime; and
2. Simplify and consolidate the fragmented disclosure requirements for MiFID, non-MiFID and Insurance Distribution Directive (IDD) investment business. 

Underpinning these reforms is the FCA’s desire to make greater use of the Consumer Duty and to produce simpler and clearer disclosure rules. The new framework will allow firms to tailor customer-facing communications in a way that promotes consumer understanding and supports more modern customer journeys. The FCA also recognises the need to future-proof its rules for a market being rapidly reshaped by new technologies and for a world in which consumers increasingly use AI to access and summarise information about investments.

The need for reform is underscored by the FCA’s multi-firm review into pre-sale investment disclosure documents, published alongside the CP. The review found that only 6% of the 132 documents examined were written in plain English, with the remainder scoring ‘difficult to read’ (31%) or ‘fairly difficult to read’ (63%). The FCA expects readability to improve under the new regime, when firms are no longer required to produce prescriptive documents and have more freedom to present disclosures in a way that promotes consumer understanding.

Who does this CP affect?

The proposals apply to firms that produce cost disclosures at the point of sale and in ongoing reporting. They primarily affect firms that provide investment distribution services, including MiFID business firms (such as financial advisers, platforms, execution-only brokers) and distributors of insurance-based investment products, as well as firms undertaking non-MiFID investment business (e.g. certain peer-to-peer arrangements). The rules extend beyond CCIs and cover professional and retail clients. 

Pensions are largely carved out and will remain subject to existing rules, although pre-sale service costs will need to follow the new COBS 6A methodology.

What is changing?

The consultation proposes five primary areas of reform, which we summarise below.

1. Pre-sale cost disclosures

The FCA proposes to reform the presentation of cost information provided to consumers before a transaction, aligning with the CCI product summary approach:

• Firms must present consumers with the total of ongoing product costs and service costs pre-sale.
• One-off product costs, product transaction costs, closed-ended investment fund (CEIF) costs, performance fees and carried interest are to be explained and disclosed separately (not aggregated into the headline total figure).
• Flat platform fees imposed over an entire portfolio must be shown as a percentage of a customer’s total holdings with the firm, not just the relevant transaction, to avoid misleadingly high percentage figures. Firms should ensure consumers understand the marginal costs (if any) of a transaction.
• Costs must be presented on a personalised, annualised basis (in both percentage and pounds and pence terms based on the consumer’s investment amount).
• Firms retain flexibility to layer or break down costs further, subject to Consumer Duty requirements, but should bear in mind that consumers struggle to understand and use very detailed cost breakdowns.
• Firms should present the pre-sale cost information in a way that encourages consumer understanding and engagement. Most firms currently rely on a static PDF document that customers have to click through to. The FCA wants firms to consider dynamic ways of presenting the information in line with the Consumer Duty and think about how to incorporate the various disclosure requirements to create a seamless customer journey. 

2. Post-sale cost disclosures

The FCA proposes to retain annual post-sale cost reporting, with certain adjustments:

• Firms must continue to disclose total costs incurred across all categories, in pounds and pence and as a percentage, at least annually, including one-off costs, performance fees and explicit transaction costs (e.g. broker commissions, research commissions passed onto funds, stamp duty). These are included in the post-sale total (unlike pre-sale) because they are known, not estimated.
• CEIF costs should be disclosed separately, with an explanation.
• A new proposal permits firms to provide a ‘reasonable estimate of actually incurred costs’ where obtaining exact figures would require disproportionate effort — intended to reduce the data-collection burden on firms. The FCA expects firms to be able to rely on the same data for their CCI and post-sale cost disclosure obligations. 

3. Removal of cumulative effect illustrations

The FCA proposes to remove the MiFID-derived requirement for a personalised forward-looking cumulative effect illustration entirely. The FCA believes that clearer cost disclosures, combined with CCI changes, will be more effective than any illustration that relies on arbitrary return assumptions. Firms may use generic or dynamic cost-impact tools (e.g. comparing returns at different charge levels) where they believe them to be helpful for consumers and relevant to the nature of the product. The FCA is not mandating any particular approach.

Post-sale, firms must instead show how the total costs have impacted investment performance over the reporting period, and make this information available over the lifetime of the service (e.g. via an online account). Firms will have the freedom to choose how to present the information in a way that best promotes consumer understanding.

4. Cash holdings

The FCA proposes changes to how firms communicate with retail clients on interest they earn and the fees they pay on cash balances.

• Firms may only charge fees on cash holdings if they pass on interest in full. This change aligns with the FCA’s 2023 Dear CEO letter, which set out its expectation that firms should not retain interest on retail clients’ cash balances in addition to levying a charge on those balances (double dipping). 
• If firms are charging fees on customers’ cash and passing on interest earned in full or if they are retaining interest instead of charging a fee, they should explain this to the consumer in a prominent place on their website/platform with their other fees information. 
• Firms should explain in a consumer-friendly way how they set the interest rate paid. For example, they could explain whether they benchmark against the Bank of England base rate or if they set a particular value which is kept under periodic review. 
• If firms do not pay interest, they may explain this in the context of their overall value offer to customers. 
• When a client puts cash into their account, the firm must give a personalised indication of fees to be charged and the amount of interest likely to be paid over the first year. Firms do not need to provide this information when receiving money with an explicit and immediate investment purpose (e.g. cash provided to fund a buy order) or directly to pay fees (e.g. a direct debit to pay platform charges).
• Ongoing/post-sale reporting must disclose interest earned by the customer and fees charged on cash balances.
• If a consumer has significant cash holdings on a platform, the FCA expects firms to consider their obligations under the Consumer Duty and, for example, contact the customer to make them aware of the drawbacks of holding significant levels of uninvested cash. 

5. Simplifying and streamlining disclosure rules (consolidation into COBS 6A)

The FCA proposes to consolidate the existing fragmented disclosure framework into a single new chapter:

• COBS 6.1 (non-MiFID), COBS 6.1ZA (MiFID/IDD) and related high-level rules in COBS 2.2/2.2A are to be merged into a new COBS 6A, removing the MiFID/IDD/non-MiFID distinction where possible. All disclosure requirements relating to a firm and its services will then be in one place. 
• Firms carrying on non-MiFID business currently subject to COBS 6.1 will become subject to the same pre-sale and post-sale cost disclosure obligations as MiFID/IDD firms. The main differences for non-MiFID business will be: (1) replacing the current rule requiring information on the ‘total price to be paid by the client’ with the new pre-sale regime; and (2) post-sale, a new requirement to provide regular post-sale cost disclosures and show how costs have affected performance.
• Prescriptive IDD-derived remuneration disclosure rules for insurance intermediaries and employees of insurance undertakings selling life policies (COBS 6.1ZA.15B–15J) are to be removed, with reliance instead on the Consumer Duty’s fair value and staff incentive standards.
• CASS 9.4 (client asset information disclosure rules) to be deleted and moved into COBS 6A.
• Professional clients and eligible counterparties: most prescriptive disclosure requirements to be removed, but high-level obligation to provide transparent cost information is retained. Firms will be able to provide either a retail client disclosure or such information as the professional client agrees is adequate. Portfolio management service information (COBS 6.1ZA.8R) and compensation information (COBS 6.1ZA.22R) are retained. Eligible counterparties continue to receive only high-level cost/charges and CASS safeguarding information. CASS information rules will be retained for professional clients and eligible counterparties. These proposals are consistent with the FCA’s ongoing client categorisation reform in CP25/36.  
• Pensions: COBS 6A will make minimal changes to how firms provide costs and charges information in relation to pensions (existing COBS 13 pension-specific rules retained). Pension providers will not be subject to the new cash holding disclosure rules (because similar rules already exist in COBS 13). Pre-sale service costs for pension products will need to be presented per the new COBS 6A methodology (currently there is no prescribed methodology). Firms will be required to disclose other information in connection with pensions, but this should not go beyond information that firms already provide.
• Cryptoasset COBS 6.1 rules from PS26/13 (in force 25 October 2027) to be copied unchanged into new COBS 6A.

What is the implementation timetable?

The FCA intends the new COBS 6A cost disclosure rules to come into force close to publication of the Policy Statement (expected Q4 2026), but will allow firms an 18-month transition period (to around June 2028) during which the existing rules may continue to apply. This is intended to avoid firms having to make disclosure changes twice (once for CCI go-live on 8 June 2027, and again for these wider reforms).

• During the CCI transition period (until 8 June 2027): where a CCI has a product summary, firms may either comply with COBS 6.1ZA.14BR or the new COBS 6A cost disclosure rules; where a CCI does not yet have a product summary, firms should comply with COBS 6.1ZA.14R as it applied before 5 April 2026.
• After the end of the CCI transition period (from 8 June 2027 to June 2028): all CCIs must have a product summary so the rules in COBS 6.1ZA.14R will no longer be relevant. From this point, firms may comply with the COBS 6A rules or COBS 6.1ZA.14BR rules until the end of the longer transition period for the rest of the COBS 6A rules which will run to June 2028.
• This transition period will also apply to costs and charges information for all other designated investment business so that firms offering both CCIs and, for example, stockbroking services can implement these at the same time. This means that firms currently disclosing costs under COBS 6.1.9R may continue to do so until the end of the implementation period in June 2028, or transition to the new COBS 6A rules on costs and charges at any time during that period. From June 2028, the COBS 6A rules on costs and charges will apply to all designated investment business.
• Manufacturers will not be required to update existing KIDs/KIIDs during the transition period unless there has been a material change to the CCI’s investment objectives or strategy, or the firm should reasonably be aware that the product’s risk-return profile has materially changed due to market events.
• 8 June 2027: New cash interest disclosure requirements will take effect (aligned with CCI go-live).

Commentary

This consultation represents a significant further step in the FCA’s programme to simplify and modernise consumer investment disclosures. Taken together with the CCI regime (in PS25/20 - see our earlier article here), these proposals will fundamentally reshape how firms communicate investment costs and charges to customers.

The move to a single COBS 6A chapter, removing the artificial MiFID/IDD/non-MiFID distinction, is a welcome rationalisation that should reduce complexity for firms, although the operational impact will vary between business lines. The incremental burden is expected to fall most heavily on firms undertaking non-MiFID or IDD-only activities that do not currently provide MiFID-style disclosures; firms already providing MiFID or CCI-style disclosures should see a more limited additional burden. There will be no requirement to repaper existing clients retrospectively, but firms will need to consider how best to incorporate this cost disclosure work into existing CCI workstreams.

The FCA’s underlying aim is to ensure that consumers have access to simple disclosures that help them make informed investment decisions and give them the confidence to invest. This move to a simpler, more flexible approach is broadly positive, but it comes with a trade-off: firms will bear greater responsibility for demonstrating that the design and presentation of their disclosures promote consumer understanding. When the new rules bed in, the FCA will no doubt scrutinise firms’ disclosure practices through a Consumer Duty lens — and firms should be prepared for that level of regulatory focus.

Article co-authored by Connie Fan