Association of Professional Compliance Consultants

The body for compliance consultants who advise firms regulated in the UK.

The APCC is active in enhancing the professional standards of compliance consultants and is recognised as a trade body by the FCA and other regulators. This provides our members with significant benefits in terms of direct access to the Regulators as well as business leads.  The APCC often works in conjunction with the FCA to pilot or test new initiatives, and we also provide with valuable feedback on specific subjects as requested by them.

Home Forums Ask another member a question Aggregated costs & charges disclosure

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  • #2455

    What are the collective views on how an initial adviser charge that has been paid direct by the client (i.e. not facilitated by the platform/provider) should be reflected within the aggregated disclosure. It’s clear that it needs to be included within the total figure but there seems to be a ‘difference of opinion’ over how/whether it should feature in the illustration of the impact said charges have on the return of the investment.

    One view is that the requirement is to consider what the return of the investment would be if there were no charges, compared with the return of the investment after all charges. So the logic is that if the adviser charges are paid direct and NOT taken from the investment then they won’t have any effect on the return so shouldn’t be included within the RIY.

    However a conflicting view is that the RIY should include ALL fees regardless of how they have been paid.

    Does anyone have anything from the horse’s mouth one way or the other? I had always taken the first interpretation but quite happy to be proved wrong.

    #2530
    AvatarVincehc3@gmail.com
    Participant

    Only just spotted this post – don’t know if you found an answer elsewhere but my reading is in line with the second. COBS 6.1ZA.11 refers to all costs incurred being required and the following clause refers to the same information as having to be aggregated. Maybe the reasoning is that if the fee wasn’t to be paid the client would have more to invest therefore a direct fee does impact on the returns the client could otherwise have received.

    Vince

    #2833

    I completely agree that COBS 6.1ZA.11 requires all costs incurred to be disclosed, regardless of the payment method. The query related more to the interpretation of 6.1ZA.14 50(10) which refers to illustrating the effect of overall costs and charges on the return of the investment. i.e. If part of the charge has been paid direct by the client, it won’t have an effect on the return. So, the table of total charges would include the direct fee, but the section of the disclosure that illustrates the impact of those charges on the return (the RIY) would disregard the direct fee.
    This is the specific aspect that I have certainly seen interpreted 2 different ways

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