Misleading annual statements for stocks and shares ISAs

christurnerchris

Just a quick message to warn people to check what the charges are on their Unit Trusts
Your annual statement is probably misleading you 
I took out two Invesco unit trusts as an PEP/ISA many years ago. 
I was looking at the statements  - "TOTAL amount of charges taken in the period"   £0 - Zero nothing (this is the same for all the statements going back 3 years) 
So I paid no charges? Thats cheap, what nothing?????????????

What is the actual charge per year do you think ?   Take a  look at the KIIP for this product GB033028001 

1.68% 

1) So if you have any old Unit trusts check the charges, it could save you a fortune in the long run 
2) Why are they allowed to mislead people - what does "total charges mean" if not the Total of the charges.  
they do have this on another page 

but thats for details, a breakdown  - I have the "Total Charges" they took,  and they say it was £0.  If they took anything else,  then that's misleading surely
Why has the useless regulator (FCA) not made them put the "Ongoing charge" which is the largest charge!!! on the statement. 
How is this a statement if it doesn't have all the charges on it ? 
They arent alone in this, Jupiter and L&G do the same thing (but much lower charges!)    
Do you think I have a compo case - 
(I have ditched them BTW ) 

SonOf

Why do you feel the need to warn us?      Give us some context so we understand why you felt the need to say that

christurnerchris

SonOf said:

Why do you feel the need to warn us?      Give us some context so we understand why you felt the need to say that

I posted too soon! see revised post

Linton

Fidelity's statement covers the charges they made.  The charges in the KIID are the cost the fund manager incurs in managing the fund and are nothing to do with Fidelity.  They are not extra charges you have to pay as they are already included in the performance data.

SonOf

I was looking at the statements  - "TOTAL amount of charges taken in the period"   £0 - Zero nothing (this is the same for all the statements going back 3 years) 
So I paid no charges? Thats cheap, what nothing?????????????
The reason it shows like that is because you are invested in the old fashioned retail share classes.   So, there are no platform/provider charges taken.  Hence nil.    The retail share class direct with provider only has the charges of the fund and that will be disclosed elswhere.
Putting it another way, think of Invesco as being both the product provider/platform and the fund within it.   The product provider/platform bit is not making any charges.    The fund is charged internally. The bit you have shown us is in respect of the product/platform. Not the fund.

Why has the useless regulator (FCA) not made them put the "Ongoing charge" which is the largest charge!!! on the statement. 
MiFIDII is an EU directive and nothing to do with the FCA.    Although the FCA has to enforce compliance with MiFIDII.

Do you think I have a compo case - 
No.   
However, you ought to look at modernising your investments to move away from retail share classes direct from fund house.  That is old fashioned and more expensive.

christurnerchris

The 1.68% they take from the fund is taken from my money.   
They send me a statement which says - Total charges  
It doesn't include the 1.68%.  So its not the Total charges is it.  There is no mention of the 1.68% on that statement   
How is that not misleading?   
The KIIP is not a statement, and doesn't state the charge actually made  either.   
There will be thousands of us in these Old fashioned funds - its the FCA's job surely to regulate them and ensure transparency, who else? 
(PS as I said I have already ditched them) 
 

SonOf

The 1.68% they take from the fund is taken from my money.   
They send me a statement which says - Total charges  
It doesn't include the 1.68%.  So its not the Total charges is it.  There is no mention of the 1.68% on that statement   
How is that not misleading?   
Charges are broken down into 3 categories.   Adviser, platform/provider and investment.
In your case, there is no adviser charge and there is no platform/provider charge.   So, the platform/provider disclosure section of charges would be nil.  Just as it is saying.    
The fund charges are taken within the fund and not explicitly from you externally to fund.  The fund charge disclosure, when that comes, will cover that part of things.
You need to think of the product provider as being separate from the fund house.  Even where the same company is providing both.     You are not paying any product charges externally.   So, nil is correct.

There will be thousands of us in these Old fashioned funds - its the FCA's job surely to regulate them and ensure transparency, who else? 
Transparency occurred in January 2013 with the removal of platform/provider commissions and adviser commissions on new investments set up after 1st Jan 2013.   
You have been free to move to the modern method, without cost, any time since then.    As you haven't, you have remained on the old share class.   However,they still have to comply with the MIFIDII requirements and they have.  
There is nothing wrong with the information you have been supplied.  Every chain in the distribution channel has to tell you their charges and Inv Perp (with its product provider hat on) charges you no explicit fee.    Inv Perp as (with its investment fund hat on) does charge you but that will appear separately.  That disclosure may not arrive at the same time.  When you put the two disclosures together, they will tell you the charges correctly.   (or would have if you were still with them).

bowlhead99

Effectively you are looking at a statement showing what happened to the investments you held and what you paid the provider to let you hold them.

What you explicitly paid the provider out of your own cash money for the service of holding the funds for you, was nothing. This was achieved by buying a fund which has a high level of operating costs/fees ; those operating costs borne by the fund include whatever cost that the fund pays out of its own assets to cover investor platform administration and reporting.

You will feel the effects of those costs as a reduced overall performance of the fund units you hold, compared to what they would deliver if the fund had only a low level of running costs (a cheap 'clean' share class) and you paid separately for investment platform services.

When you look at the investment fund performance factsheet/ information document it will tell you that there were x% of management fees and other ongoing charges taken out of the fund's assets.

However if you look at a platform statement that's not designed to give you a look through to the internal workings of the fund... but instead designed to show you what assets you hold, what income you received from them and how much they charged you to hold them, you will not see those internal costs. You will literally see what you held at the beginning of the period, what you invested, what you sold, what income you received and what costs you paid. 

For example, the statement shows that you didn't receive any income from your holdings or do any buying or selling of fund investments or make any payments for service charges. Does  that literally mean that the Acc funds in which you were invested didn't do any buying or selling of shares in the underlying companies that they own, and that they didn't receive a single penny of income from anything they invested in, and that they didn't incur any kind of costs to run their operations? No, of course it doesn't mean that. 

It means that you are looking at a statement of what has happened to your account, rather than what has happened inside the underlying investments. All of their buying and selling, realised and unrealised gains and losses from their investments, income from their investments and expenditure on their running costs is wrapped up in their overall performance where they started the period being worth £15.77k and ended the period being worth £16.22k. If you want to know what costs were incurred within the fund, you can refer to their ongoing charges percentage (and transaction fee disclosure) on their factsheets or KID, or wait for a separate periodic statement of that activity.

Hope this helps

christurnerchris

dear Sonof and bowlhead 
Thank you for patiently explaining to me  how they get away with it. Since two others companies are doing the same thing its probably all perfectly legal and yes I should have checked this all up years ago. But that's not my point.
My point is that its still misleading. And the FCA who regulate this should be doing something about it. 
People wont be checking it because its not on their statement (deliberately) .  And I have NOT had a  "separate periodic statement of that activity" ever.  And I think the FCA should be making these companies make all those charges and fees they are taking more explicit on the annual statement.    They have the numbers - its not hard!
 EG -  ongoing fees for fund GB2343242- 1.68% - £232 ....
or something crazy like a link to the website where the KIIP is ? 
And I wanted to warn others like me who have forgotten the original T&C for these old PEPs and things
and hopefully get a few people to complain to the FCA and maybe they will do something? 
 

coyrls

christurnerchris said:

dear Sonof and bowlhead 
Thank you for patiently explaining to me  how they get away with it. Since two others companies are doing the same thing its probably all perfectly legal and yes I should have checked this all up years ago. But that's not my point.
My point is that its still misleading. And the FCA who regulate this should be doing something about it. 
People wont be checking it because its not on their statement (deliberately) . 
 

I think you are wrong that people won’t be checking it.  I would suggest that most people investing in funds understand the difference between fund charges and platform charges.

SonOf

Thank you for patiently explaining to me  how they get away with it.
They are not getting away with it.  They are correctly complying with the rules.

My point is that its still misleading. And the FCA who regulate this should be doing something about it. 
It is not misleading.    The figures are correct.   

People wont be checking it because its not on their statement (deliberately) .  And I have NOT had a  "separate periodic statement of that activity" ever.
The rule change requiring disclosure of fund charges came in during 2018 but effectively had 12 months to comply with most providers starting to issue them early in 2019.    

And I think the FCA should be making these companies make all those charges and fees they are taking more explicit on the annual statement.  
They are required to disclose them annually in arrears since 2019.  If you didnt receive one during 2019, then contact them asking for a copy of your annual costs and charges disclosure.

hopefully get a few people to complain to the FCA and maybe they will do something? 
There is nothing to complain about. Inv Perp comply with MIFIDII.  They also confirm this on their website.

The problem appears to be that you are struggling to understand the difference between provider/platform and investment fund.
How much have Invesco as the product provider charged you? - the answer is nil
How much have invesco as the fund house charged you? - this will be on the investment fund cost and charges disclosure.