It has taken over 20 years to bring in a requirement for genuine cost and fees transparency in the investment industry with the new European Union directive, Mifid II, which will come into force in January 2017.
At last there appeared to be an end of the scandal of hidden fees on the horizon, with even the former chief executive of the Investment Association admitting earlier this year that the industry has shown charges “over the last 20 years with disclosure that nobody understands at best and which can be misleading at worst.”
Article 23 of Mifid II will require all advisers and wealth managers to reveal in one number, in percentage and pounds, the total costs facing consumers over the life of an investment; at least once a year or on request.
But the decision reported today (9 November) by Investment Adviser that the FCA will not require a standardised format means consumers face being as baffled as they are at present.
This decision has been taken even after consultation, where industry participants, including the frequently anti-consumer Investment Association, have urged the FCA for a standardised disclosure.
The FCA has chosen to ignore this completely saying, “We’ve considered those responses in great detail and have decided for now it’s not appropriate for the FCA to standardise that disclosure,” seemingly because of concerns that “this may not suit all parties”.
As is so often the case, the one group the FCA appears to ignore are consumers.
Had the FCA spoken to consumer during this consultation, it would no doubt have received a universal response that without a uniform, standardised format investors would not be able to compare one investment product with another.
They say it would be too difficult to design one standard that fits all products.
Why not simply have different standard templates for different product areas – mortgages, pensions, investments, insurance, etc?
As founder of the True and Fair Campaign it is my strong view that the consumer benefits of transparency are significantly compromised without standardisation as it does not afford consumers the ability to make comparisons across different products.
This is simple common sense which the FCA appears to lack.
It makes one wonder whether FCA consultations are just a PR stunt as they frequently appear to not listen to contributors and pre-decide the outcomes.
According to the FCA itself, “Our purpose is to make sure markets work well so that consumers get a fair deal.”
The anti-consumer magnitude of this decision means a fair deal a long way off.
It is slightly ironic that the FCA used to be called the FSA since the FSA is the name of the Food Standards Agency that “leads on food safety aspects of food labelling”.
It is a great shame that the FCA cannot take a leaf out of their book and have clear, uniform, cost and charges labelling.
Our own True and Fair Campaign consumer research has shown that consumers would invest more if they could easily compare costs and charges:
FCA – it is time that the C in FCA stood for consumers.
Gina Miller is founder and spearhead of the True and Fair Campaign
