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IMA attacks FSA ruling on RIYs

The IMA is accusing the FSA of gold-plating for requiring reduction-in-yield calculations as well as total expense ratios to be shown on investment documents.

The FSA has just published its final rules and guidance for the simplified prospectus and is introducing the EU requirement of showing TERs but dem-anding RIYs as well.

The rules are designed to help investors across Europe get clear, uniform information about collective investment schemes, building on the current key features document.

The FSA says it is also keeping the RIY figure bec-ause UK consumers find it helpful although the figures will not be shown on funds sold across Europe to ens-ure a level playing field.

But the IMA says reduction in yield is harder to understand and explain than total expense ratios and that using both terms will confuse investors. The changes will be reviewed in 2008.

IMA chief executive Rich-ard Saunders says: “This amounts to gold-plating the European requirements. We would have preferred to see RIYs dropped altogether and we look forward to working with the FSA on these questions.”

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