The FCA has published a statement in response to concerns about costs and charges disclosure in the PRIIPs KID, UCITS KIID and MiFID II requirements. The concern was that the required costs and charges disclosure for listed closed-ended funds (which have some features of companies as well as of funds) may not result in representative cost information being published. This is because some of their costs can be equivalent to costs incurred by commercial companies which are not subject to these costs and charges disclosure requirements.
Pending broader reform through legislative change, the FCA has introduced a temporary measure to give investment companies greater ability to explain their costs and charges to help consumers make better informed investment decisions. Where listed closed-ended funds and funds that invest in them are concerned that the costs required to be disclosed do not appropriately reflect the ongoing costs, they can provide additional factual information to give a better explanation of costs that are clearly corporate costs. They can also reflect such explanations in other customer facing communications but should consider their Consumer Duty obligations when presenting such information.