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<p>Government and regulators have undertaken a range of initiatives in relation to
charges on investment products.</p><p> </p><p>The Financial Conduct Authority (FCA)
has conducted an extensive market study into the asset management sector, including
the examination of costs and charges. They have introduced a range of remedies to
address the issues they found. In particular, the FCA have strengthened and clarified
the duty on managers of investment funds to act in the best interests of their investors.
New rules will require asset managers to assess the value for money of each fund against
a non-exhaustive list of prescribed elements, including whether charges are reasonable
in relation to the costs incurred in delivering the service, and the quality of the
service provided. The managers must conclude that each fund offers good VfM or take
corrective action if it does not and explain the assessment annually in a report made
available to the public.</p><p>The FCA also identified concerns that charges might
not always be visible to investors and that investors might not pay sufficient attention
to charges or understand what they represent. In response, the FCA introduced a single
all-in fee to increase the visibility of all charges taken from the fund and impose
more discipline on overspend relative to charging estimates.</p><p> </p><p>The FCA
has also considered the role of charges as part of its work on competition in non-workplace
pensions, including self-invested pension plans (SIPPs). They found that charges in
this market are often too complex for consumers to be able to compare and that similar
customers can pay very different charges. The FCA concluded that it would not be appropriate
to recommend direct price intervention such as a cap at this stage, but it is considering
next steps in the context of its upcoming work on driving value for money across the
pensions sector. The FCA’s Feedback Statement on this topic is seeking views on what
remedies would be appropriate and will close in October 2019.</p><p> </p><p>Early
exit charges were banned or capped in personal pension schemes, including SIPPs, from
March 2017. Information obtained by the FCA and the Pensions Regulator (TPR) showed
that early exit charges presented a barrier to accessing the pension freedoms for
a significant minority of people in personal and occupational pension schemes. Following
consultation, the Government took steps to remove these barriers by capping early
exit charges at 1% for existing scheme members and banning them for new members.</p><p>
</p><p>The charges imposed in respect of investments held within Stocks and Shares
ISAs are a matter for individual ISA managers. ISA managers must allow investors to
transfer existing Stocks and Shares ISAs to an alternative manager.</p>
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