IMA responds to FCA review on how fund charges are set out – We need to (not) talk about the AMC
The IMA responded positively to the FCA’s proposals that all public discussion and marketing materials that refer to fund charges should use the Ongoing Charges Figure (“OCF”) rather than the better known Annual Management Charge (“AMC”).
Daniel Godfrey, IMA Chief Executive, said:
“The IMA’s guidance has long been that member firms should not refer to the AMC in marketing literature, but should exclusively refer to the OCF. The OCF provides a common standard for all the known costs and charges that a fund will bear in a single comprehensive ratio that is easy to understand and to compare. This is in stark contrast to the AMC because a range of other costs can be borne by the fund, making the AMC a poor reflection of the total cost at worst, and a poor basis for comparison at best.
“The IMA calls on all market participants, fund managers, platforms, IFAs, data providers and the media to respond by abandoning all use of AMCs and by the exclusive use of the OCF in marketing literature, advice and commentary. This is an important element of the IMA’s programme to bring simplicity, transparency and comparability to consumers across all investment types.
“In addition, we aim to produce a comprehensive pounds and pence measure for historic costs and a common basis for the calculation of Portfolio Turnover Rates (“PTR”).
“Consumers need information that ensures they get a complete picture and that they can fully understand. And this needs to apply across all products and all distribution channels. I’m grateful for the FCA’s support and we look forward to working with them to get to the right solutions for consumers across the board.”
