On March 27, the Investment Association (IA), the UK investment management trade association, opened a consultation on a new code (Code) for enhanced disclosure of charges and transaction costs.
The goal of the Code’ is to develop a consistent and comprehensive framework to allow fund and asset managers to deliver underlying charges and transaction cost information using standard definitions, regardless of the distribution channel and the way in which this information is eventually presented to clients.
The Code focuses on providing clear information on charges and costs in the context of an ongoing industry-wide initiative on enhanced transparency, which includes the following regulatory measures: (1) the revised Markets in Financial Instruments Directive (MiFID II) reform package; (2) the Packaged Retail and Insurance-based Investment Products Regulation; and (3) the Financial Conduct Authority’s (FCA) consultation on draft rules for transaction cost disclosure to workplace defined contribution pension schemes.
The IA notes that the consultation is taking place at a time when the FCA’s asset management market study is still in progress (further information on the market study can be found in the Corporate & Financial Weekly Digest edition of December 2, 2016). The IA considers that the market study may result in outcomes relating to charging structures and disclosure that may affect the future shape of the proposed Code, and states that any final document will need to take into account decisions taken by the FCA.
The deadline for responses to the consultation is May 19. The IA plans to publish a feedback statement and a final set of proposals in the third quarter of 2017.
Subject to any further changes to FCA disclosure requirements, the IA plans to ask the FCA to incorporate the Code into the rules in its Conduct of Business sourcebook.
The Code is available here.