Platforms 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.”