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In a statement this week, the Financial Conduct Authority (FCA) laid out the various ways it had found fund managers to have either misunderstood how to interpret rules around disclosure of fees, or were wilfully disregarding them.
It said a recent review of the sector had shown that, while most asset managers calculated transaction costs in accordance with the relevant rules, it found problems with the way some measured transaction costs and how prominently and clearly they disclosed them.
“This review also found that asset managers generally do not disclose all associated costs and charges and these are therefore not sufficiently clear to the end investor,” the FCA said. “Where full cost disclosures are made, there are inconsistencies between different documents and websites, and customers can therefore find the information difficult to understand.”
The FCA said it could only conclude that asset managers may be communicating with their customers in a manner that is “unfair, unclear or misleading and as such, investors can be confused and misled as to how much they are being charged”.
“Based on our sample, where consumers attempt to undertake research themselves, the information they are currently given does not give a fair and clear account of how much they will pay when they invest in financial products,” the FCA said.
The regulator accepted that there were several different regulations to which companies must adhere, but it found that many were either using the fee calculation tools incorrectly or outsourcing to third parties and failing to check standards were being met.