The panel has stated that it believes information disclosure via a KID is not a guarantee of consumer protection.
The FSA has introduced a new KID which will change the way financial services products are communicated. It suggests risk-related information should be included in the investment objectives of a fund prospectuses to avoid implying positive returns or guarantees when none exist. Vice-chair Kay Blair said this KID should only form one part of the consumer protection structure.
She said: "Within the context of appropriate remuneration and straightforward products, the KID has the potential to strengthen consumer protection. However, the format of the document must be rigorously tested and assumptions on which it is based must be clear and understandable if it is to achieve its objectives.
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"The problem with financial services is that there is a fundamentally unequal relationship. Products are sold by highly knowledgeable providers to consumers who often lack an understanding of the full nature of the product they are buying. "Although the concept of a document which allows comparison between products with similar outcomes is welcome, it is difficult to see how a single document can bridge the information gap."
Separately, the IMA has voiced its concerns about the effectiveness of the FSA’s proposals to deal with fund descriptions that may imply a level of capital protection or guarantee on positive returns when no guarantee exists.
In its response, the IMA recommends an alternative approach. The FSA suggests that risk-related information should be included in the investment objectives of a fund’s prospectus but the IMA outlines a number of reasons why this would not achieve the FSA’s goal:

1. It would not cover all investment products that use such descriptions or all funds that may be promoted in the UK. This is because prospectus requirements apply only to UK authorised funds, so there would not be consistent and reliable information for consumers across all products and funds marketed to retail investors.
2. Risk disclosure should not be part of the investment objectives section because investment objectives set out the aim of the fund not the risks.
3. While fund prospectuses are available to investors, few investors request them in practice.

Julie Patterson, IMA director of authorised funds and tax, said: “We think it makes more sense to review the FSA’s financial promotion provisions, as these are what investors see. They also capture all products marketed in the UK to investors."
“Furthermore, European regulation already requires firms to produce a Key Investor Information Document (KIID) for all UCITS funds, which includes a risk and rewards section. If the FSA is of the view that further disclosure for UCITS is required, we recommend close collaboration with ESMA (the European Securities and Markets Authority) in order to deliver a harmonised approach across all UCITS so that investors can compare funds on a like-for-like basis."

• Editor's Note 10.12.12: In the first version of this story, uploaded on 5 December, the views of the Financial Services Consumer Panel and the IMA were combined. Following comments about the two differing views of the organisations and the fact that they were commenting on different aspects of FSA consumer information the stories were separated and a new version (above) was uploaded on 10 December.