FCA has made a start on tackling cost disclosure issue, but much more to be done

• Read FCA ‘Statement on communications in relation to PRIIPs and UCITS’

The Association of Investment Companies (AIC) has commented on today’s statement from the Financial Conduct Authority (FCA) on the issue of cost disclosures.

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “The FCA’s statement acknowledges that a single all-in cost figure may not be the most useful to consumers, and that a breakdown of costs could improve transparency and increase competition. We have long argued that bundling costs such as transaction costs, gearing costs and underlying fund costs together can create perverse incentives and does not help inform consumers’ decisions.

“This interim step is far from a full answer to the problems of cost disclosure. Consumers may benefit from a breakdown of costs, but there is much more to do before we can reverse the distortions caused by the current rules and give investors better disclosures.

“We will work with the FCA and the industry to use this new flexibility as fully as possible. This will include updating our guidance to members on cost disclosure. Meanwhile, we will continue to press for a fuller solution that does not disadvantage investment companies and allows them to compete fairly with other investments. Time is of the essence and the promised consultation on the new rules cannot come soon enough.”

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Notes to editors

1. For more information on the AIC’s cost disclosure proposal, see this press release.
2. The Association of Investment Companies (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 investment companies to be understood and considered by every investor. The AIC has 343 members and the industry has total assets of approximately £256 billion.
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