Investment Association launches public consultation on the standardisation of disclosure for charges and transaction costs

Monday 27 March 2017

The Investment Association has today launched a public consultation on the standardisation of disclosure for charges and transaction costs. The consultation sets out an industry code, which provides a blueprint for the reporting of charges and transaction costs using a consistent approach across the market and in line with regulatory requirements.

The consultation forms part of an ongoing industry wide initiative on enhanced transparency. As well as facilitating provision of data under MiFID II and PRIIPs, it is intended to be fully compliant with final rules for the UK DC market following FCA CP16/30. It will adapt, as necessary, to the conclusions of the FCA Asset Management Market Study.

Our work has been assisted by an Independent Advisory Board, which includes senior individuals from the UK pensions industry and representatives from consumer bodies, set up in July 2016 to provide advice and challenge to the IA. The Board has provided valuable counsel to the IA in the development of this disclosure work and has issued an interim report on progress so far and an outline of future work. This report can be found at http://theindependentadvisoryboard.co.uk/. The IA’s work has also been undertaken in collaboration with the Local Government Pension Scheme Advisory Board, and in line with recommendations from the Financial Services Consumer Panel.

Jonathan Lipkin, Director of Public Policy, said:

"The asset management industry is fully committed to transparency and recognises the need to provide clear disclosure of both charges and the transactions costs incurred as part of the investment process.

"The new Code provides for the first time a common framework for enhanced disclosure across investment products and services. It is a major opportunity to consistently define and provide data on charges and transaction costs.

"The IA would like to work with the FCA to seek regulatory recognition for the new Code in the FCA’s Conduct of Business Sourcebook.

"This consultation is designed to encourage feedback from industry, consumer, Government and regulatory bodies on the proposed approach ahead of the Code’s final implementation and we welcome views from all stakeholders."

The closing date for consultation responses is Friday 19th May 2017. The IA will then review all feedback and publish a final set of proposals in Q3 2017.

- ENDS -

For further information, please contact:

Alex Hogan
Communications Manager
[email protected]
T 020 7269 4620
M 07508 724 066

Notes to editors:

The Investment Association's new Code will supersede the Pension Fund Disclosure Code and the CIS Disclosure Code, which create a similar regime for investment funds. The existing Disclosure Code framework, widely used within the UK pension market, was first adopted in 2002 and was last revised for MiFID I. Reporting requirements and expectations have changed significantly since that time and our new framework will reflect this, notably to include implicit transaction costs. The timing of the overhaul has been dependent on the evolving EU disclosure landscape.

The new Code can be viewed here.

The cost reporting templates presented in the Code can be viewed here

Further Background

In 2012 the Investment Association made a proactive start on investment fund charges and costs disclosure by publishing guidance on 'Enhanced disclosure of fund charges & costs'. The guidance called for consistent language and methodology to be used across the industry for both charge and transaction cost disclosure.

The Association then focused on engaging with European regulators as extensive cost and charges work under MiFID II and PRIIPS took place, while also publishing a new Statement of Recommended Practice to create clear cost tables for funds' explicit charges. Further work on measures to assess implicit costs, through calculations of stock turnover, was unveiled by the Association in 2015 as it published 'Meaningful disclosure of costs and charges', a technical paper aimed at informing the MiFID II and PRIIPS debates.

About the Investment Association:

• The Investment Association is the trade body that represents UK investment managers who manage over £5.7 trillion on behalf of clients
• Our purpose is to ensure investment managers are in the best possible position to:
• • Build people’s resilience to financial adversity
  • Help people achieve their financial aspirations
  • Enable people to maintain a decent standard of living as they grow older
  • Contribute to economic growth through the efficient allocation of capital
• The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
• The UK is the second largest investment management centre in the world, after the US and manages 37% of all assets managed in Europe.