In August, the International Organisation of Securities Commissions published its final report on Good Practice for Fees and Expenses of Collective Investment Schemes. The publication’s aim is to identify common international examples of good practice that can be applied to retail collective investment schemes’ fees and expenses. We review the recommendations made in the report.

The board of the International Organization of Securities Commissions (“IOSCO”) has published a final report entitled “Good Practice for Fees and Expenses of Collective Investment Schemes” (“CIS”)” (the “Report”).


IOSCO is an association of organisations established to regulate the world’s securities and futures markets and comprises members from over 100 countries. Its membership is responsible for the regulation of more than 95% of the world's securities markets.

The board of IOSCO is the governing and standard-setting body of IOSCO and is made up of 34 securities regulators, which includes the Central Bank of Ireland.

The Report is the second to be published by IOSCO setting out good practices on this issue. A previous review was conducted in 2004. The Report is published in the context of heightened regulatory scrutiny surrounding CIS and deals with CIS whose shares or units are permitted to be sold to retail investors.

Examples of Good Practice

The 23 examples of good practice set out in the Report reflect approaches to issues identified by regulators in some key areas, which include permitted or prohibited costs for a CIS, transaction costs and performance related fees, among others.

IOSCO has stated that these examples of good practice provided in the Report build on the existing standards set out in the 2004 report, with some new examples included.

IOSCO has provided that any key changes and enhancements now set out in the Report relate to the following recommendations made to CIS operators:

  • define permitted and prohibited costs and how new or increased fees should be approved and/or communicated to investors;
  • provide more detail on the calculation of performance fees;
  • summarise information to investors on key elements of fees and expenses;
  • provide for the use of electronic media for disclosing information to investors about fees and expenses;
  • provide more disclosure about types of costs charged to CIS as transaction costs;
  • provide ways to manage and disclose conflicts of interest in the use of soft commission arrangements;
  • provide disclosure of how soft commission arrangements are used;
  • provide for disclosure of double charging structures when one CIS invests in another; and
  • provide more detail about keeping information on fees and expenses up to date and giving investors adequate notice of material changes.

IOSCO has stated that the examples provided in the Report are not intended to serve as comprehensive requirements for the regulation of fees and expenses. Indeed, IOSCO has stated that markets will continue to evolve and change, raising the possibility of the need for further revisions or enhancements to the examples of good practice set out in the Report.


IOSCO’s intention in publishing the Report is that high standards of transparency and conduct in this area should help encourage competition among CIS operators and lead to a more efficient market, thereby eventually benefiting all investors.