The Financial Conduct Authority (FCA) has today raised concerns about the way financial advisers are disclosing costs and charges.

The FCA said it has found all advisers it reviewed were aware of the Mifid II rules and their responsibilities to disclose all costs and charges to customers. There were however some intermediaries in the sample who interpreted the rules inconsistently, making like-for-like comparisons of costs and charges difficult.

Some advisers told the FCA they were leaving out transaction and incidental costs and charges because they could not get the necessary data. They explained that this was compliant as the rules allowed them to estimate the costs as zero. The FCA has argued that it does not consider this an appropriate interpretation of the rules, and there is room for firms to use "a reasonable and sufficiently accurate estimate of the total costs of the financial instrument".

Advisers were told by the FCA they should also review pre-sale assumptions based on post-sale experience and adjust where necessary.

The regulator said it expects an investment firm to take reasonable steps to minimise the effort required for a client to request an itemised breakdown.

A few businesses were found by the FCA to be prominently advertising low costs while disclosing higher aggregated costs in less visible parts of their website. The City watchdog argued such a practice is unlikely to meet the requirements that marketing material be fair, clear and not misleading, and that information in marketing communications is consistent with that provided to clients in the course of providing services.

The FCA stated it told firms it found doing this to change their disclosures accordingly.

To view the key findings document click here

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