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Platforms accused of ignoring data under Mifid II rules

Data-Corporate-Finance-Business-Pen-Graph-Growth-700x450.jpgPlatforms have been accused of ignoring fund manager data when disclosing fund fees in line with new European regulation.

Mifid II, introduced on 3 January, requires investment managers to disclose transaction costs as a separate figure from the ongoing charges. Advisers must also report all of those costs to their clients.

However, advisers tell Money Marketing a number of funds are shown as having transaction costs of either a negative figure or zero on some platforms.

Fund managers calculate transaction fees using two methods: under Mifid II, fees are calculated on the bid and offer spread on trading; under the Priips regulation, ‘slippage’ costs are included.

When using the second option, many fund charges may show a negative figure.
Wrap platform Transact is showing zero costs on a number of funds instead of posting the negative costs given by fund managers.

Transact chief development officer Jonathan Gunby says showing a negative charge would be “confusing” for clients. He says: “We decided to [put a zero instead of negative] when building the system because it would have been confusing… We are keeping this under review and are in discussions with trade bodies and other providers to see what standard the industry [will bring].”

Gunby says no one had contac­ted Transact about this issue before Money Marketing did.

He adds: “When the calculations were originally envisaged, I didn’t expect the negative figure.”

Gbi2 managing director Graham Bentley says many platforms are applying a “free interpretation” to the new charges disclosure.

He says: “Platforms are ignoring the data if you have a negative [figure]. Old Mutual Wealth is showing negative [figures] on the funds. Aviva illustrations don’t  match its web figures.”

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Comments

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

  1. This is a regulatory issue not a platform issue. Based on Transact’s response they are simply trying to do the right thing for the underlying client. In the absence of guidance on the matter it’s all they can do.

    Inevitably, different firms will make different decisions and inconsistency will reign. The only question is how long the FCA will allow this to persist before they intervene. Quite some time is my guess…

  2. What a mess. Does anyone actually believe this is in the clients interests.

    The FCA need to get a grip of this issue before it get out of hand. Currently the client information is comparing apples and pears and is less than useless you have a PhD in Mathematics.

    • The PhD in Maths will only expose the utter uselessness of all of this! Information is supposed to be helpful; how are clients supposed to make sensible decisions when presented with senseless data? The regulators need to bang their collective heads together and, just this once, try to make a decision that actually improves things. This is ridiculous and the FCA’s obsession with costs really highlights their lack of grasp of the problems facing the industry. Back to basics Mr FCA – try to stop the bad guys from doing bad things and, only after you’ve done that, look for ways to make the industry even better.

  3. Poor Transact. Of all the data I monitor across advised and D2C platforms, Transact is one of the ‘top’ performers in terms of data accuracy. I can show you major platforms linking wrong KIIDs, grossly misstating OCFs, inflating Dividend yields, the list goes on. Yet Transact tends to do ‘well’. Not perfect, but well. Where’s the Transact listing story? IPOing at £580m to £650m – that’s interesting news, no?

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