Investments  

IMA consults on charge disclosure method

The Investment Management Association has launched a consultation to introduce a new ‘price per unit’ cost into funds’ annual reports.

The fund management trade body is updating its Statement of Recommended Practice (SORP), which details what fund managers should include in their products’ annual and interim reports.

The proposals lay out in detail the plans of chief executive Daniel Godfrey for a ‘price per unit’ method of estimating the entire cost of holding a fund, including dealing charges, to be rolled out next year.

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Mr Godfrey said: “We need to ensure that no reasonable observer can accuse the industry of ‘hiding’ charges and that our clients are well informed both about total cost and performance.

“We’ve had terrific support for this initiative from our members and external stakeholders and I hope that, if the details are agreed for the SORP by the end of the year, we will start to see the data being introduced in the course of 2014.”

The SORP proposals include details of the administration and operating costs, as well as dealing costs, taxes and research charges.

Mr Godfrey said he hoped the move would encourage platforms and other distributors to add their own costs on top of the IMA’s guidance to improve disclosure across the distribution chain.

“We also need to develop methodologies for providing a better and clearer way of explaining to clients what they can expect from a fund so they have a real basis for knowing when they should be pleased and when they should be disappointed,” he added.