The UK’s Financial Conduct Authority (FCA) announced that it is setting out forbearance measures for investment company cost disclosure.
The FCA says it has now set out temporary measures “to give investment companies greater ability to explain their costs and charges to help consumers make better informed investment decisions.”
The FCA explains that it is currently “taking steps to address concerns that current disclosure obligations are producing unhelpful cost information for consumers.”
To support better cost disclosure, the FCA says that it will “allow funds to provide a factual breakdown of the component parts of their costs.”
According to the UK regulator, this will enable funds “to provide additional context where they are concerned that the aggregate figure currently required by legislation does not accurately reflect ongoing costs.”
The update from the regulator also mentioned that this particular measure is “not intended as a long-term solution, but is a step towards wider reform.”
As noted in the update, investment companies, and funds that “invest in investment companies, can also consider how they reflect this additional information in their wider disclosure documents.”
The FCA says it also expects firms “to consider their obligations under the Consumer Duty.”
As confirmed in the announcement, these changes are meant to “support their objectives under the Consumer Duty, that consumers receive the information they need, at the right time, and presented in a way that they understand.”
The FCA claim they are already “working towards wider changes to the cost-disclosure regime, subject to legislative change, including the revocation of PRIIPs Regulation.”
In its recent Policy Statement, the Treasury has committed “to repeal relevant MiFID cost and charges provisions.”
This will allow them “to design and deliver a comprehensive and cohesive cost disclosure framework.” They now look forward to the opportunity “to implement the future retail disclosure regime.”
The FCA will continue to “work closely with the Treasury to ensure the Future Disclosure Framework improves market transparency, competition, and consumer protection.”
