Investment fees shakeup?

jimjames

So having completed the Retail distribution review where costs were separated out, it looks like the FCA now want a single fee to be quoted.


http://www.bbc.co.uk/news/business-38024796


U-turn or just a misleading press release?

lpgm

It reads as if they're talking about adding all the fund manager's costs together, rather than adding back the platform charge. Maybe!

lpgm

More detail in this article: http://www.investmentweek.co.uk/investment-week/news/2476983/fca-proposes-all-in-fund-fees-and-further-work-on-platforms-adviser-roles/page/2

dunstonh

There seems to be a different conclusion to the FCA report across the media. it looks like a new definition of OCF is on the cards which will be a more representative figure of the real costs.

However, they have also said they are looking at advised funds and non-advised funds to see if value is being added. Hard to know how they can measure that and advisers have already come out in force to criticise. Vanguard has also said today that they don't think they can operate robo-advice in the UK like they can in the US as the FCA requirements are set too high. It felt hardly any US models meet the FCA standards.

The FCA has always said it is not a price regulator. Now in the space of a week, it has either ruled (in the case of pensions) or set in place a number of consultations about price.

To be honest, I just wish the FCA would sort the real issues out. Frauds, scams, sales behaviour are ll the key issues that consumers have real problems with. Yet the FCA is awful at dealing with those. Instead it continues to micromanage the minor things.

If any business has things it knows that is going wrong or could be going wrong, it puts resources into the areas that cause the most issues. The FCA does the complete opposite.

SallyG

"micromanage the minor things."
Are charges minor? If they are, why are we told over and over that no matter how astutely you invest, charges will always be the pinch point strangling growth at birth. Do IFAs know when clients are being subjected to covert charges - what do they do about it?

bigfreddiel

The FCA behaviour sadly tarnishes all financial people with same brush so finding a trustworthy one seems a near impossible task for most people. They just look at all the problems banks have and their somewhat dodgy practices, like the LIBOR scandal. A quick Google of banking fines shows how big the problem is!

fj

jimjames

SallyG wrote: »

"micromanage the minor things."
Are charges minor?

Charges obviously matter but are visible if you want to look so any impact is minor. I'd say it would be far better to focus first on stopping people losing £100k in an investment scam than making paperwork marginally more clear.

dunstonh

SallyG wrote: »

"micromanage the minor things."
Are charges minor? If they are, why are we told over and over that no matter how astutely you invest, charges will always be the pinch point strangling growth at birth. Do IFAs know when clients are being subjected to covert charges - what do they do about it?

Charges are generally transparent and easy to see across advisers, platforms and funds. There is frequent debate as to whether fund charges are as clear as they should be and whether other costs they incur should be included or not.

Look at this board. Look at the FOS complaints. Look at the people falling for scams. These are the areas where the resources need to be as these are the major issues affecting consumers. Once you have those sorted out, then these other things can be looked at. The FCA cannot and does not look at everything at once. It picks the easy targets every time even if they are not the major issues.

talexuser

I thought OCF was a better TER (It was widely reported as such when introduced) and am surprised there are yet more charges not included. Is really that difficult to declare all the charges, and then concentrate on the scams and false advertising? If a fund has a lot more churning for whatever reason in one year than another, than declare it in the periods typical charges similar to NAV, and it can go down again the following time period. Charges are very important in deciding whether an active fund is worthwhile or not.

Linton

talexuser wrote: »

......Charges are very important in deciding whether an active fund is worthwhile or not.

Why????

As long as the published performance matches what a real investor would actually have received and the investments the fund says it holds match reality why should I care how much is in charges? Why is it any different to baked beans? The cost of a a tin of baked beans is a combination of the cost of the raw materials, the charges (processing, transport and selling costs), and profit. You dont know how much you are paying in each category. Is this information you need? Or are you capable of choosing for yourself the baked beans that meet your requirements at a cost you are prepared to pay?

darkidoe

Linton wrote: »

Why????

As long as the published performance matches what a real investor would actually have received and the investments the fund says it holds match reality why should I care how much is in charges? Why is it any different to baked beans? The cost of a a tin of baked beans is a combination of the cost of the raw materials, the charges (processing, transport and selling costs), and profit. You dont know how much you are paying in each category. Is this information you need? Or are you capable of choosing for yourself the baked beans that meet your requirements at a cost you are prepared to pay?

Wouldn't the performance advertised be before any charges are applied??