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FSA urged to produce common disclosure document

Nucleus chief executive David Ferguson is calling for the regulator to press ahead with its proposed ban on bundled pricing.

He argued that disclosure is key for platform providers and that bundled platforms need to be up front about more than just charges and rebates.

Ferguson said: “The disclosure point is key but it is not just disclosure of a charge, it is the disclosure that by committing to that platform you are ruled out of investing in a certain part of the investment universe.

“The reality is that bundled platforms are bundled so they can make economic gain from aggregating client money. They are pocketing the benefit and it is not their money. The world does not work that way any more. Aggregation of consumer buying power goes back to the consumer, it does not go to the aggregator.”

To tackle the issue of platform transparency, Fidelity head of UK fund partners Ed Dymott suggested a common disclosure document produced
by the FSA that would break down the total customer cost into its individual charges.

Ascentric business development manager Alan Ferguson said drilling down to disclose every charge may not be appropriate in every case but
should be available to advisers nonetheless.

He said: “You can get into the minutiae and the detailed different charges but it gets pretty silly. The point is that there should be complete clarity for the customer in every case, irrespective of what type of client they are. There should be full disclosure of all charges and if the IFA wants to disclose that to the client because it is appropriate, then they should be able to do that.”

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  1. There already is a long standing ‘common disclosure document’ called ‘Key Features’ which discloses the effect of charges by a ‘Reduction in Yield’ calculation. This reduces all charges, no matter how complicated and various, to one comparable number. The calculation rules could do with some attention and policing from the FSA as some providers seem to be taking the mickey with the numbers they provide and not enough IFAs appreciate what the numbers mean.

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