Funds to be forced to improve the quality of information for consumers
The Financial Conduct Authority (FCA), a regulator, has published its second set of rules for asset managers to improve the quality of information they give to consumers and cut out the jargon.
The new rules set out how fund managers should describe clearly the objectives and investment policies of each fund they offer.
In particular they should explain whether a fund uses a certain benchmark and why, and if it doesn’t use a benchmark how investors are meant to measure the fund’s performance.
Managers also have to clarify that where a performance fee applies, it is calculated based on the fund’s performance after all other fees have been deducted.
The FCA’s market study has already shown that fund managers don’t compete enough when it comes to pricing their funds.
Now it wants to make sure investors know exactly what they are buying and that they get what they are paying for.