The Financial Conduct Authority has raised concerns about the way some advisers are disclosing costs and charges.
Today (February 28) the regulator revealed it has found all advisers it reviewed were aware of the Mifid II rules and their responsibilities to disclose all costs and charges to customers.
But the regulator found intermediaries in the sample interpreted the rules inconsistently, making like-for-like comparisons of costs and charges difficult.
Here are five things the FCA revealed it expects advisers to do to improve the way they explained how much they get paid.
1) Flag all the costs
Mifid II introduced a need for advisers to calculate and disclose 'transaction costs'.
These costs include those from buying and selling underlying assets in an investment product.
The FCA saw many examples of companies which distributed investment products disclosing their own transaction costs but not disclosing investment product transaction costs.
This meant the distributor's aggregated figures were wrong.
According to the FCA this mistake was widespread early in 2018 and, while there was some improvement as the year progressed, some businesses were still not disclosing these charges.
Some advisers told the FCA they were leaving out transaction and incidental costs and charges because they could not get the necessary data.
They explained that this was compliant as the rules allowed them to estimate the costs as zero.
But the FCA stated it does not consider this an appropriate interpretation of the rules.
In the absence of actual costs to use as a proxy, the FCA said the rules do allow firms to use reasonable estimates.
But the FCA said advisers should make "a reasonable and sufficiently accurate estimate of the total costs of the financial instrument".
Advisers were told by the FCA they should also review pre-sale assumptions based on post-sale experience and adjust where necessary.
2) Push the hyperlinks
Mifid II requires that advisers give customers itemised breakdowns of costs and charges at the customer's request.
However the FCA found these breakdowns were not always adequately signposted for investors.
The regulator said it expects an investment firm to take reasonable steps to minimise the effort required for a client to request an itemised breakdown.
The FCA flagged European regulators have suggested that best practice for disclosing costs and charges online would be to enable a client to get this information through hyperlinks.
3) Be careful if you claim you are cheap
A few businesses were found by the FCA to be prominently advertising low costs while disclosing higher aggregated costs in less visible parts of their website.
The City watchdog argued such a practice is unlikely to meet the requirements that marketing material be fair, clear and not misleading, and that information in marketing communications is consistent with that provided to clients in the course of providing services.
The FCA stated it told firms it found doing this to change their disclosures accordingly.