trade body calls for a raft of product types in its response to the sandler review
Autif is using its response to the Sandler Review to push for regulatory change to allow a raft of stalled product types to be introduced. It claims a lack of regulatory responsiveness is stifling the UK's ability to compete with Dublin and Luxembourg.
The trade body is looking to kick-start the development of limited issue and limited redemption funds, allowing managers to restrict investor access to, and departure from, a portfolio.
It has said that non-Ucits securities funds specifically designed and marketed for sophisticated investors, which are allowed in centres like Dublin, should also be allowed in the UK as many groups would prefer to run them from London.
Another stalled issue Autif is seeking to resurrect is making futures and options funds Isable. It argues that the restriction limits marketing and hence consumer choice.
It also wants IPA regulation revisited as, in their current form, IPAs must be attached to an existing approved pension and Autif considers them too complex. A further suggestion is that a number of Autif's member companies should be allowed to establish restricted forms of hedge fund for sale to the public.
The AITC is pushing for changes, calling for investment trusts to be granted the exemption to stamp duty reserve tax and VAT on management fees paid to fund managers, both of which were given to authorised unit trusts and Oeics. The AITC also repeated its call for investment trusts to be made eligible for stakeholder schemes.
Both the AITC and Autif, in common with most responses to Sandler from bodies such as the LIA, ABI and AIFA, call for an increase in transparency for customers on how they are being charged by intermediaries.
In its response to the Sandler Review, the AITC has recommended that once a year, intermediaries should provide customers with a clear statement of all costs incurred by the consumer in the provision of investment advice.
Another common theme in these industry responses is a demand for the review to recognise the value of the existing advice channel and do nothing to weaken it, including any further undermining of polarisation.
Most trade body responses call for tougher entry-level exams for intermediaries, stipulating that they must contain higher level testing on investment knowledge. Autif director general Richard Saunders said that currently, intermediaries can qualify to give advice without answering a single question on investment issues.
All groups have come out against capping commission to intermediaries, citing almost certain market distortion and reduction in quality. However, the AITC has called for fund management groups to stop charging direct investors at an inflated level, to bring initial charges in line with the cost of buying a fund via intermediaries.
Daniel Godfrey, director general of the AITC, said: 'At the moment, we have the bizzare situation where consumers, having done their own research and selected a unit trust, find the cheapest way to buy it is to purchase through an independent financial adviser on an execution-only basis to get back most of the initial commission.
'The adviser gets the balance of the initial commission and typically 0.5% per annum renewal commission for not giving advice. This is economically mad.'
Saunders however, said the charging structure used by fund management houses for direct business reflected the need to recognise the cost of advice.
In its response, Schroders called for the use of standardised performance data and comparative information in the mutual funds industry's marketing material. It said that performance tables using standard periods against the peer average would provide a base line of competition and give the consumer more information to support decisions.
Sandler Review of medium and long-term savings
The review followed the conclusion of Paul Myners that: 'Competition to offer retail customers superior investment performance should be the primary driver of investment decision-making. In principle, however, several factors work against this.'
The review's remit is: To identify the competitive forces and incentives that drive the retail savings market. In particular, in relation to their approaches to investment and, where necessary, to suggest policy responses to ensure that consumers are well served.
It covers life insurance savings, pensions and collective investments.
The deadline for submissions has passed. The findings will be published around June next year.
It is unclear what will happen once the report is published. It could involve further Treasury-led reviews or FSA consultation papers bringing in regulatory change.
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress