AIC fears general election will delay cost disclosure reforms
The Association of Investment Companies has expressed concerns that the July general election will put the resolution of cost disclosures on the back burner, harming the £273bn listed funds sector for longer.
The trade body’s chief executive Richard Stone said the delay was ‘frustrating’ and that fixing cost disclosure regulation must be an urgent priority for the next government.
‘There is broad cross-party support for the principle that government sets the boundaries for regulation and the Financial Conduct Authority sets the rules,’ Stone said in a press release. ‘The incoming government on 5 July must prioritise finalising and passing the legislation which is already in process so that the FCA can reform cost disclosures.’
The simplest solution is to remove investment companies from the scope of regulated cost disclosure – returning to the position that was in existence before January 2018, he added.
‘The government must also address the misleading way in which investment company costs are presented by wealth managers and platforms,’ Stone said. ‘The next government should move swiftly so the FCA can stick to its current timetable and complete its work on this by the autumn.’
Pensions minister Baroness Ros Altmann told Citywire that while the general election meant new regulations and that her own private members bill was lost and would have to start again from scratch under a new government, Labour had been fully supportive of cost disclosure reform.
‘Labour has fully supported the urgency of reforming cost disclosures for investment trusts and the problems faced by this sector that are damaging consumers, the economy and our financial markets,’ Altmann said. ‘I would hope they will seize this issue early on.’
The Labour party, which polls suggest is the favourite to win, has indicated its plans to boost the UK’s financial services sector, outlining ways of revitalising capital markets and driving investment into the net zero transition in its Financing Growth publication in January.
The publication, which was advised by leading figures in the sector, including Abrdn’s chair Douglas Flint and the London Stock Exchange Group’s chief executive David Schwimmer, indicated that investment companies would play a central role in doing this.