|
|
The intervention follows a long-running controversy about asset managers — whose investment products form part of many people’s pension plans — passing expenses on to clients without disclosing them upfront.
The issue has caused a major rift in the fund management industry. Daniel Godfrey, the former head of trade body the Investment Association, was ousted after he pushed for clearer fee disclosures. The IA has long argued that it does promote transparency, however.
European financial regulators have issued draft rules on the sale of retail investment products, specifying that fund costs should be disclosed in aggregate and in a standardised format, allowing people to compare funds more easily. The rules propose that “all types of cost” borne by the fund should be “taken into account in the amount to be disclosed”.
Despite financial modelling being a core part of their daily business, UK asset managers have generally argued they cannot predict some costs of running their own funds. Their variable costs include the commissions they pay to stockbrokerswhen they buy and sell shares, as well as paying stamp duty and buying investment research.
Full article in Financial Times (subscription required)