International Consultation on Good Practices for Fees and Expenses for Collective Investment Schemes
08/25/2016The International Organization of Securities Commissions published a final report outlining good practices on fees and expenses for collective investment schemes. The report is aimed only at CISs whose shares or units are permitted to be sold to retail investors. IOSCO states that appropriate information about fees and expenses should be available so that an investor can take them into account when making an investment decision rather than relying purely on past performance. IOSCO’s Committee on Investment Management reviewed existing practices with respect to fees and expenses in collective investment schemes in 2004 and again in 2015, with good practices published as a result of the review in 2004. The latter review reflected a wider range of regulatory approaches towards markets at different stages of maturity, as well as taking account more recent developments in its member jurisdictions, in light of the natural evolution of best practices since the 2004 report as regulators adapted their approach.
The final report follows an FSB consultation published in June 2015 and sets out 23 good practices, which includes those previously published in 2004 with some enhancements and additions. This includes defining permitted and prohibited costs and how new or increased fees should be approved and/or notified to investors. The good practices also require more detail to be provided to investors on the calculation of performance-related fees and additional summarized information on key elements of fees and expenses. Further enhancements have also been made to good practices on the use of electronic media for disclosing information about fees and expenses and ways in which funds should manage and disclose conflicts of interest in the use of soft commission arrangements.
View the report.TOPIC: Funds