The UK’s Financial Services Authority found that many retail advisory firms don’t comply with its new disclosure requirements.

Recent research by the FSA found that over half of firms surveyed are failing to follow its new rules on disclosure of firm status and commission charges, introduced last year.

Since June 2005, firms have been required to give customers two “keyfacts” documents at the start of the advice process. These documents were introduced to provide consumers with clear, straightforward information to help them understand the services and products a firm offers, the fees or commission it charges, and the other options available elsewhere in the market.

The regulator carried out 130 mystery shopping assessments of 81 firms of all sizes. This showed that advisors gave out both the required documents only 58% of the time. And in only 42% of the assessments were both of the required documents given out and at the right time.

The FSA also carried out desk-based work into the contents of 519 disclosure documents from 168 firms. It found that 65% of these documents contained errors and many of these were in key sections that could make it difficult for consumers to compare and shop around.

“FSA rules are not optional and these results are very disappointing. These firms are not new to regulation and senior management should be well aware of their responsibilities for compliance with our rules. Those firms that are not complying must review their procedures as a matter of urgency and make the necessary changes,” said Clive Briault, managing director of Retail Markets at the FSA.

“Disclosure documents are crucial for consumers,” Briault added. “Firms need to comply with our rules to ensure that consumers obtain the key information when they need it to make an informed choice.”