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FCA calls for AMCs to be scrapped as it highlights charges failings

An FCA review has also found that some investment firms are already using consistent and combined charging structures effectively across documents and platforms

The FCA has called on fund groups, advisers and platforms to scrap annual management charges in favour of ongoing charge figures after finding fund groups are failing to display fees “clearly and consistently”.

The regulator reviewed the way 11 fund groups set out their marketing information for UK retail consumers and found inconsistent charging structures. 

It says: “A minority of firms could not provide a clear rationale for their charging structures, indicating insufficient consideration of investors. Others were inconsistent in their use of charge information, displaying the AMC on factsheets and websites rather than the ongoing charge figure or total expense ratio. 

“Investors may be unsure about which figures to compare and how the various charges differ.”

The FCA recommends all firms, including advisers and platforms, to use ongoing charges as the headline charges figure for Ucits funds.

FCA director of supervision Clive Adamson says: “We believe it is important for investors to clearly understand and compare charges across the market as this, together with fund performance and risk profile, is the key area they should look at.”

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