"Most online firms are not giving them this information clearly, most of the time. It is obvious these firms do not have a clue how to communicate in a way their customers understand."
The research, conducted for the Panel by Boring Money, also found that many online investment and advice services failed to disclose costs and charges in a way that allowed consumers to understand how much they would be paying and for what, and state whether consumers would have recourse to the FSCS or FOS.
The research also found that consumers in the sample did not understand the difference between regulated advice and guidance.
The Panel recommends the FCA leads an industry and consumer working group to develop simpler, more consumer friendly, language to be used consistently across the sector, and urges the regulator to better ensure firms quoting all-in fees are complying with the current rules on costs and charges.
Sue Lewis, Consumer Panel Chair, said: “More and more people with relatively small amounts of money to invest are turning to online investment services, many of them with cash they have released under pensions freedoms. They need to know exactly what they are buying, what it costs, and what happens if something goes wrong.
"Most online firms are not giving them this information clearly, most of the time. It is obvious these firms do not have a clue how to communicate in a way their customers understand. The FCA should enforce its rules in this area vigorously, whether firms are giving regulated advice or not, before more people who can ill afford it lose out.”
