FCA indicates willingness to make meaningful changes to cost disclosure
AIC comments on FCA’s Consultation Paper CP25/9**
Today the Association of Investment Companies (AIC) commented on the FCA’s Consultation Paper CP25/9** ‘Further proposals on product information for Consumer Composite Investments’.
Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “Today’s announcement indicates that the FCA is willing to make meaningful changes to cost disclosure. Abolishing the calculation of implicit costs has been a long-standing demand of the AIC and this approach is a big step forward. We hope it’s a signal that other serious problems with cost disclosure will also be addressed – specifically the pull through of underlying fund costs and the combining of different costs with different characteristics which both result in meaningless disclosures.
The current approach to transaction costs has led in some circumstances to the disclosure of ‘negative costs’ which are confusing and nonsensical. Previous sticking plaster solutions have not removed the burden of calculating these costs which have no value to consumers and can distort disclosures.
Richard Stone, Chief Executive of the Association of Investment Companies (AIC)
“The current approach to transaction costs has led in some circumstances to the disclosure of ‘negative costs’ which are confusing and nonsensical. Previous sticking plaster solutions have not removed the burden of calculating these costs which have no value to consumers and can distort disclosures.
“We also welcome the FCA’s intention to change the rules so that consumers receive cost information calculated on the same basis at every point of their investment journey. Currently, the pre-sale information costs are based on an estimate of future costs and the post-sale information costs are the actual expenses incurred. This results in different numbers presented at different points in the investment journey and is very confusing for consumers. It’s good to see that the FCA has recognised this.”
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