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IFAs warn public may be misled as FSA issues tables

IFAs have accused the FSA of encouraging investors to seek lower-charging investments despite industry warnings that cheaper charges do not equate to good performance.

The publication last week of the FSA&#39s unit trust and Oeic comparative tables initially for UK growth funds has led IFAs to accuse the FSA of contradicting its own mission statement of protecting consumers.

The tables allow investors to sort prospective investments in terms of either cost or alphabetical order while a filter enables the selection to be narrowed down to the cheapest 25 or 50 per cent of funds and to Cat-standard products.

Money Marketing research, conducted in July by investment selection service Shouts, showed that lower-charging funds on average perform worse than those with higher charges.

As expected, the FSA&#39s tables fail to include any measure of past performance. However, the FSA has included a full explanation of why performance figures have been omitted, conceding that not everyone agrees with its decision.

The website says: “It is a naturally comforting idea to choose a fund or fund manager that has performed well in the past. But our research suggests that, over the medium to long term, a good-performing fund in the past has much the same chance of delivering good results in the future as most other funds in the same sector. Not everyone agrees with our assessment.”

FSA chairman Howard Dav-ies says: “The tables do not – and cannot – put investment decisions on autopilot. Many consumers will still want and need advice. But they will help to inform and educate the investing public.”

Michael Philips proprietor Michael Both says: “Clearly, the FSA has decided there is only one thing that matters – price. Any consumer looking at this site will think this is what is approved by the FSA. I think they could be very dangerous and very misleading. I do not think they are doing consumers a favour.”

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