The industry body said the guidance was intended to sit alongside and complement existing regulatory requirements such as the disclosure of fund charges is Key Investor Information Documents (Kiids).
In a paper the organisation said its recommendations were “consistent with the regulatory requirements” but could not alter or add to the disclosures that must be made in Kiids.
Some will feel the IMA has capitulated with regards to its stance on the costs funds incur as part of buying and selling underlying investments, also known as transaction costs, which some have criticised as being “hidden” from investors.
“These transaction costs affect a fund’s investors in different ways depending on whether they are joining, leaving or continuing with their investment in the fund,” the association’s guidance said.
Policy reversal
Previously, the IMA’s chief executive, Richard Saunders came out against hidden charges in the funds industry and said they were a “complete myth”.
Saunders said at the time: “While some commentators claim they are not disclosed to investors, these costs are readily available in fund literature and investment fund regulation requires their disclosure.”
And yet the organisation has said today that it recommends enhanced disclosures be made readily accessible to investors via clearly signposted sections of asset management firms’ websites.
At the same time the industry body has launched a new website guide on charges and costs and suggested member firms link to this from their websites.
In order to encourage members to comply with its guidance the IMA plans to indicate on its website those which are doing so.
At the start of this year SCM Private founder Alan Miller lambasted the IMA, accusing it of leading the FSA in the wrong direction by reducing transparency rather than improving it.
His firm launched a “True and Fair Campaign” to improve disclosure of fees and to address concerns about what he termed “questionable practices in the industry”.
To see the IMA’s full guidance, click here.
