FCA gives more details on thematic review into fund charges

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The Financial Conduct Authority has shed more light on the thematic review it is launching on fund charges, first announced in March 2013

Unveiled in its business plan for 2013/14, the FCA has now revealed it will be writing to 11 asset management firms enquiring about their fund charges.

More specifically, the regulator is looking to examine what the charges are and how they are broken down and overseen, when compared alongside information provided to end-investors.

With the 11 firms including global asset managers and boutiques, the review is being carried out with support from the Investment Management Association.

An FCA spokesman says: “We think the charging can be quite complex and this can be quite difficult for consumers to compare different funds and charges. We are using this spread [of asset management firms] to see how this works. We understand the up front charges but we want to look at the extra charges.

“We will start the review this week and we will be finished by the end of the year.”

The IMA itself has been vocal on the issue of cost disclosure, with chief executive Daniel Godfrey campaigning for unit-by-unit cost breakdowns for all funds.

Godfrey says: “The IMA and its members are pleased that the FCA is seeking to ensure it has a comprehensive understanding of the way fund managers operate, both to align with investors’ interests, and to ensure they meet both the spirit and the letter of extensive regulations on fund charges and disclosure.

“In the meantime, the industry has proposed new, simple, comprehensive disclosure that goes well beyond that required by regulation, because we believe that it is clearly in consumers’ interests that they are well informed both about the costs and the performance of their investments.”