Trustee and Fiduciary Services Global Asset Management Industry Insights

Prime, Futures and Securities Services 12 COSTS AND CHARGES Survey respondents are clear in their views on the success, or the lack thereof, of regulatory efforts to date to promote greater fund costs and charges transparency and disclosure, with only 16% believing that regulators have been successful in their endeavours so far. Some 49% of respondents believe more needs to be done by regulators, and 16% think asset managers need to do more. Have efforts to promote greater fund costs and charges transparency and disclosure been successful or is more required from regulators? Q6 16 % No, asset managers need to do more 49 % No, more needs to be done by regulators 16 % Yes it has Under the “other category” of responses, which makes up the remaining 19%, there are several recommendations that include: 1 greater dialogue/collaboration between regulators and firms will ensure cost disclosures are truly transparent and effective for consumers; 2 greater consumer research needs to be undertaken so that disclosures are positioned for maximum consumer understanding; and 3 while regulatory changes have been successful in places in reducing costs, the same cannot be said for transparency. More focus is needed here. In Europe, PRIIPs was highlighted as an example where regulators got it wrong, particularly being slow to recognise or acknowledge the impact of cost methodologies that don’t achieve what is said on the tin. Pointing to recognition in this area, ESMA’s upcoming consultation in 2019 will include consumer testing. In Europe ESMA also launched on 16 July 2019 a public consultation on draft guidelines on performance fees under the UCITS Directive. The purpose of the guidelines is to harmonise the way in which performance fees can be charged to UCITS and its investors while ensuring common standards of disclosure, as current practices vary among EU Member States. Responses are requested by 31 October 2019. In addition, ESMA is asking stakeholders whether the proposed principles should be applied to AIFs that are marketed to retail investors. Publication of this report suggests that it supports our survey respondents’ view. 19 % Other