The FCA has published Thematic Review 14/7: Clarity of fund charges (TR14/7).
In TR14/7, the FCA discusses the findings from its clarity of fund charges project and reminds firms of the current regulatory framework.
The FCA has two key messages following its thematic work:
- using the annual management charge (AMC) in some marketing material and the on-going charges figure (OCF) in other documents may confuse investors and hinder their ability to compare charges; and
- using the OCF consistently in all marketing material for UCITS funds is likely to help investors understand and compare charges.
The FCA also sets out its expectations and these include:
- firms have a duty to act in the best interest of investors. This means all firms must ensure their charges are clear to investors, particularly retail investors;
- communications with retail customers should be fair, clear and not misleading for both UCITS and non-UCITS funds;
- for UCITS funds, information on charges in marketing material (including websites) must be presented to investors in a way that is consistent with the key investor information document. This means using the OCF as the headline charges figure;
- platforms, advisers and other intermediaries should also use the OCF as the headline charges figure for UCITS funds; and
- descriptions of charges in the prospectus should explain clearly how the charges work.
The FCA asks all authorised fund managers to consider the findings in TR14/7 and review their arrangements accordingly.
View Thematic Review 14/7: Clarity of fund charges, 13 May 2014