Fund managers silent on FMA’s hard-hitting fees and commissions report
In the regulator’s sights are trail commissions – the ongoing payments made to financial advisers and other intermediaries for introducing investors to managed funds schemes.
Specifically, the FMA is concerned about the non-transparent way these commissions are paid out to third parties and then billed to all scheme members as part of a management fee, regardless of whether the intermediary introduced investors to the scheme or whether investors joined up directly. And the FMA appears equally concerned about the arguments used by some fund managers to try to justify these decisions.
The language and tone of the FMA’s Value for Money report at times borders on aggressive, particularly for a government department. There are words like “nonsense” and “lazy”, and it is clear the gap between the regulator’s expectations and industry practice is wide.
But since the report’s release, fund managers have not appeared keen to publicly debate the issues. Some were “too busy”, some offered up a PR person for comment rather than a fund manager, some wanted more time to consider their response and others promised to call back but didn’t.
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