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Wealth Management News

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25 Sep 2013

New Rules To Ensure Transparency Of Fund Management Charges

Investors are often confused by the effect of fund management charges on their savings but under new rules to be introduced in April 2014, all investors will be provided with full information regarding the fees they have been charged, the Sunday Telegraph reported.

The reform was confirmed by the Investment Management Association (IMA), which explained that investors will receive annual statements that show the real costs, including hidden expenses. It is estimated that the new rules will affect about five million savers investing in a range of shares and bonds in funds run by professional fund managers.

The value of total expenses has caused confusion among investors for years because they were only given percentage figures relating to the annual change in savings. These did not show the breakdown into actual returns and management fees, audit expenses and stamp duty, the Telegraph said.

Over the past two years, management costs and other charges in pension schemes and investment funds have been under extensive probe from regulators. Campaigners have been claiming that by hiding various costs from investors, funds were not acting in customer´s best interest.

According to IMA´s chief executive Daniel Godfrey, the new rule will make fund groups more accountable to investors and will ensure that they act in a transparent and simple way. Annual statements will display the cost per fund unit in pounds and pence, allowing investors to multiply that by the total number of units they own to see what the actual effect is.

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