Consumer duty to increase focus on product design

Investment companies well placed to benefit.

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The Association of Investment Companies (AIC) has welcomed the increased emphasis the FCA’s latest policy statement  “A new Consumer Duty” (PS22/9) places on product design to deliver better outcomes for investors.

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “We welcome the increased responsibility the new Consumer Duty will place on firms to ensure the right products and services are being offered to customers. When firms design and review their products they should take into consideration the outcomes that they are trying to deliver for consumers. 

“Investment companies have proven benefits which lead to excellent long-term outcomes for investors. We hope the new Consumer Duty will encourage more asset managers to consider launching investment companies. We also believe more advisers need to consider investment companies and platforms should give them appropriate prominence when presenting portfolio suggestions to their customers.”

Investment companies have strong long-term performance, having outperformed open-ended funds in 12 out of 16 sectors over ten years. They have unique income benefits with 17 dividend hero investment companies having increased their dividends for more than 20 years. Investment companies also provide permanent capital which makes them an ideal structure for alternative assets such as property or infrastructure.

Last year purchases of investment companies on adviser platforms amounted to £1.3 billion. This was an increase of 23% on 2020. However, only 15% of adviser firms use investment companies, according to data from ISS Financial Clarity.

 

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Notes to editors

  1. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment. Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s vision is for closed-ended investment companies to be considered by every investor. The AIC has 357 members and the industry has total assets of approximately £258 billion.
  2. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.
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