Some things are easier said than done and it looks like costs and charges disclosure is among them.
The introduction of Mifid II in 2018 means investors must now be given a breakdown of how much they are paying for their investments before and after transactions – that is to say, they need to be given an estimate of how much it cost them and then how much they ultimately ended up paying.
This seems simple on the face of it. Indeed, if shops did not tell anyone how much their wares cost, they would probably not survive very long.
But, as we have seen in recent months, since advisers have started having to tell their clients how much they paid over the past 12 months, things are not that easy.
The main reason for this seems to be the presence of middlemen – the platforms that are not playing ball or at least playing ball very inconsistently.
And it now turns out advisers face a struggle because some platforms provide a breakdown of costs and charges for calendar years only, so, if your client’s annual review happens to be in June, you are in a bit of a pickle.
Separately, the Financial Conduct Authority found earlier this year that some advisers were leaving out transaction and incidental costs and charges because they could not get the necessary data.
Addressing these issues to make sure costs disclosure works is in the interests of everyone: obviously, the investors who know what they are paying, but also advisers and platforms themselves who are likely to benefit from greater transparency and the confidence clients will get from it.
It seems increasingly like it is the platforms that are letting the side down – they need to up their game.
damian.fantato@ft.com
