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How far will the FCA take platform fee disclosure?

fee disclosureThe FCA has been hinting at ramping up disclosure of platform and asset management fees, leading some to believe it is a matter of time before investors can compare prices for investment solutions as easily as they can for other consumer products.

Regulation such as Mifid II, alongside the FCA’s asset management and platform market studies, has shown the regulator’s intention when it comes to increasing transparency of costs and charges across the value chain.

However, questions remain whether comparison tools – particularly those that seek to compare platform costs with fund fees included – can overcome the complexity that is embedded in the market.

Taking transparency further

In its interim report on the platform market, published in July, the FCA was tight-lipped about how far it might take fee disclosure, but open about the fact it was looking at strengthening disclosure requirements already in place.

The report says: “We are not proposing additional costs and charges disclosure rules at this stage. Yet we want to see more innovation in the way platforms present their Mifid II costs and charges data.

“This will help consumers to assess and compare the total cost of investing; for example, by providing customers with interactive tools to calculate and personalise total charges, and to better raise awareness of fund charges.”

It goes on to say that, before its final report next year, the FCA will assess if the industry has innovated sufficiently.

The report says: “We will then see if we need to introduce further remedies to make sure the industry uses the opportunity created by Mifid II to genuinely help consumers compare and choose platforms.”

Mifid II came into force in January and has already mandated clearer communication of fund, platform and advice fees to clients.

On top of that, in April the FCA introduced measures that follow on from its asset management market study, requiring enhanced independence on funds’ boards, and tackling weak price competition and lack of clarity in fund objectives.

In line with their drive towards strengthening of oversight, Fundscape director Bella Caridade-Ferreira is taking her existing Compare the Platform tool one step further and developing a service that will allow a comparison between platforms with fund fees factored in.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. As I have said on many occasions in the past:

    How hard is it for a platform to include on their valuations their charge for the period in question, together with the charges over that period for every fund in the portfolio and finally the adviser can then add their charge, so that over the period in question all charges are crystal clear. It really isn’t rocket science. (But maybe too much for inept platforms such as AEGON and Aviva)

    • Yep, I agree Harry. The platforms we tend to use the most show monthly, quarterly and annual charges for adviser, platform, dealing and stamp duty in the client reports we issue to clients. As you know Harry, I record all client meetings which means I have a recording of us stating how much the client has paid us via the platform and their response on the recording. The paper report or suitability report may disclose something and does give the consumer the opportunity to respond and question, but not immediately unlike the recordings.
      I charges are queried (which they rarely are) we can discuss what has been done with them and move on without risking soaring the client relationship or requiring a follow up meeting.

  2. How long until an independent body armed with the necessary authority takes the FCA by the scruff of the neck and steers it in the direction of the issues towards which it really should be directing its firepower?

  3. There is a platform comparison site for advisers that includes platform and investment fund costs together. It’s called Adviser Asset.

    Often the platforms with low cost fees are more expensive when fund costs are added in, when compared with more expensive platforms that have negotiated good fund discounts.

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