Eve Maddock-Jones, Investment Week, 12 November 2024:
Investment trust boards have been faced with a decision to either be barred from new investments if they do not publish costs in line with pre-Brexit regulations, or compromise on their Consumer Duty obligations.
Meanwhile, retail investment platforms are raising similar client protection concerns as part of an ongoing debate over the sector’s cost disclosure reform.
Closed-ended investments had been subject to two EU directives, PRIIPS and MiFID II, which targeted non-UCITS vehicles and required them to be more transparent with their cost disclosures.
Back in September, the Treasury and the Financial Conduct Authority moved to temporarily make investment trusts exempt from complying with these rules after electing that the existing methodology was creating issues for trusts..
William MacLeod, managing director at Gravis and member of the cost disclosure reforms campaign group, said the situation was “quite frustrating”..
He said the firm, which manages two trusts, has followed the “implied guidance” laid out by the FCA on how trusts should go about disclosing their costs.
“We stopped publishing what we perceived to be an error, which was to publish an ongoing cost,” he said.
James Carthew, co-founder and head of investment company research at QuotedData, agreed that the self-determining wording of the Duty regulation had clashed with a similar level of inter-firm determination regarding cost disclosure.
“That is the word, interpretation,” he said.
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