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FCA sheds more light on fund charges review

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The Financial Conduct Authority has shed more light on its thematic review into fund charges. 

The regulator first outlined its investigation into fund charges in its business plan for 2013/14 in March. The FCA has now revealed it will be writing to 11 asset management firms enquiring about their fund charges.

The FCA is specifcally looking to examine what the charges are and how they are broken down and overseen, when compared alongside information provided to investors.

The 11 firms include global asset managers and boutiques, and the review is being carried out with support from the Investment Management Association.

An FCA spokesman says: “We think charging can be quite complex and this can be quite difficult for consumers to compare different funds and charges. We are using this spread [of asset management firms] to see how this works. We understand the upfront charges but we want to look at the extra charges.

“We will start the review this week and we will be finished by the end of the year.”

The IMA itself has been vocal on the issue of cost disclosure, with chief executive Daniel Godfrey campaigning for unit-by-unit cost breakdowns for all funds.

Godfrey says: “The IMA and its members are pleased the FCA is seeking to ensure it has a comprehensive understanding of the way fund managers operate, both to align with investors’ interests, and to ensure they meet both the spirit and the letter of extensive regulations on fund charges and disclosure.

“In the meantime, the industry has proposed new, simple, comprehensive disclosure that goes well beyond that required by regulation, because we believe it is clearly in consumers’ interests they are well informed both about the costs and the performance of their investments.”

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