Citi 2018 FinReg Outlook

Share Class Switching The FCA is investigating ways to make it easier for retail investors to switch to better value share classes. This includes removing barriers that restrict moving investors to cheaper share classes without their consent. Final proposals are expected in the first half of 2018. Share Class Sunsets The FCA may introduce a sunset clause for share classes launched prior to the January 2013 introduction of the Retail Distribution Review (RDR) that still pay trailer fee commissions. The RDR banned the practice of paying trailer fee commissions in the UK. Final proposals are expected in the first half of 2018. Performance Fees The FCA is studying whether further policy action is required to ensure performance fees are more equitable and that they sufficiently align the incentives of asset managers and investors. A consultation is expected in the first half of 2018. Investment Platforms The FCA has determined that additional investigation is needed to ensure the investment platform industry has sufficient competition, is working in the best interests of investors, and is delivering value for money. The FCA has launched an Investment Platforms Market Study. An interim report, with its preliminary conclusions, is expected by the summer. All-in Fee for Retail Investors The FCA is proposing an all-in fee that would include estimated transaction costs. The aim is to enable investors to better understand the true cost of fund products and encourage price competition. The FCA is expected to issue a further consultation on the issue early this year. Extending the Scope The FCA may extend the scope of its proposed reforms to other sectors that provide retail investment products sold by insurance companies, such as unit- linked products, personal pensions, and investment trusts. Final proposals are expected in the first half of 2018. Citi Custody & Fund Services – FinReg Outlook 2018 25 24