True and Fair Campaign: IMA cost rules ‘half-baked and misleading’

The True and Fair Campaign has hit out at the Investment Management Association, claiming its new comparable fund cost measure is “misleading the public, regulators and politicians.”

In response to the Financial Services Consumer Panel’s damning report on the transparency of fund charges, industry lobby the IMA published its “pounds and pence” disclosure model.

The new format would detail the exact cost of an investment in the past year as well as performance, the IMA said.

“Every penny spent by the fund is included in this figure and so it provides a simple, accessible, all-inclusive measure of all costs. Nothing is hidden and nothing is left out.”

However, True and Fair Campaign founder Gina Miller says the IMA’s proposal does not do what it claims and is part of an “anti-consumer line” towed by the lobby group.

“We invite readers to judge how the IMA proposed cost table below tallies with its claims – where are the costs in pounds?” she argues.


“It is not all the costs and, in addition, publishing this table in the back of the annual report one year after purchase will amount to it still being hidden.

The measure is too complicated – with 13 different numbers – and does not include spread cost, which can account for an extra 85 per cent of a fund’s cost, she explains.

Also, the new “half-baked” disclosure will be included in often-ignored fund annual statements that are available to investors a year to 18 months after they invest, she adds.

The IMA has said “there is more to do” on charge disclosure, and that it was working on ways to improve the comprehensiveness of the reported cost figure.

“The IMA is working on ways to measure and explain the significance of both portfolio turnover and spread and the part they play in returns,” the industry body said.

IMA chief executive Daniel Godfrey defends the measure, saying it is a work in progress.

“Every penny spent by the fund is included with nothing hidden and nothing left out,” he explains. 

The information needed to calculate the “pounds and pence” spent is in the annual report, but it will allow fund managers, journalists and data providers to highlight the figure to most investors who are unlikely to read the accounts, he says.

“And they will.  As we’ve always said, this is only a first, but necessary step in giving consumers everything they need to be well informed and able to make better decisions with the benefit of truly meaningful, comprehensive and understandable disclosure,” he adds.

“These other steps are already well advanced, but this first, pounds and pence disclosure of total cost and performance is the crucial platform on which all else will rest.”

While the single figure does not include spread costs, that is not spent by a fund, it is a difference in prices, so technically not something “paid”.

Miller says: “Rather than tackling industry failings and embracing change the IMA continues to harm the UK investment industry and treat British investors with disdain.

“Instead of accepting the constructive criticism in the FSCP Report, written by respected experts and academics, and putting every effort into speedy, practical and understandable solutions, it appears the IMA is intent on being disingenuous by issuing false statements,” she adds.