ANNOUNCEMENT: Expert Investor is now PA Europe. Read more.

An all-in fee: what does it really mean for investors?

The UK financial regulator FCA wants asset managers to introduce an all-in fee for funds, claiming it would aid simplicity and clarity for retail investors.


Louise Hill

From next year investors will pay a single actual charge with fund managers providing an estimate of total transaction costs expected to arise over the coming year, after 12 months the investor will receive confirmation of how much they actually paid.

It was branded “good news for investors” by 7IM’s chief executive Tom Sheridan, who said the all-in fee concept made sense.

However, he added: “The challenge is to ensure that asset managers report this fee in a consistent, comparable way and that there are no unintended consequences along the way.”

Christopher Woolard, FCA director of strategy and competition, said the change to charges simply reflected upcoming changes across Europe.

He said: “We think it will provide the right level of simplicity and clarity and it also builds on the emerging measures we have now seen in Mifid and Priips and the wider European context.”

Having the charge explained simply in pounds and pence was, Woolard said, “a significant step forward in the clarity for consumers”.

The regulator has put out a consultation paper on a range of other potential changes to how fund managers will operate in the future.

It hopes introducing requirements for funds to have a minimum of two independent directors on their board will ensure better accountability over issues such as fees and performance.

It also wants to introduce new ‘prescribed responsibilities’ for asset managers under the Senior Managers’ Regime for the chairman of a fund’s board asset managers, making them responsible for ensuring the fund acts in the best interest of clients.