IMPLICATIONS FOR REGULATORS
Conduct Authority (FCA), due to replace the FSA in 2013, will do the same. This is despite the government’s remit to them to “be more outward-looking and engaged with consumers than the FSA has been”.8
Getting rid of the EU’s smoke and mirrors For example, the first thing we (the investors) would do is to revisit the 2001 EU UCITS directive. It stated the need to clearly and simply disclose all charges for customers. Let’s rip up the EU’s smoke and mirrors with TER and PTR. Also rip up the KIID, son of the Simplified Prospectus, and let’s start again with a blank sheet of paper. On that paper we need to write down (and itemise) all the actual costs, including trading commissions, stamp duty, etc, from the last year’s accounts. There may need to be deduction for the distribution levies paid against them to correctly reflect inflows. Clearly, it will not include the effects of price impact and bid/offer spread. However, they could be easily estimated from a standard formula. We’d then have, for the first time, a genuine summary of the real visible costs of running a fund. Moreover, the consumer would expect to see this total charge number go down as the fund total value goes up (not the opposite, as we saw in Chapter 7). My views are also those of most investors. In a survey of 2,029 UK adults conducted in December 2011,9 89% agreed that fund managers should be required to make a full disclosure of ALL fees.
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