Confusion will reign among consumers if advisers are forced to divulge to clients the total expense ratio (TER) of their investments in mandatory disclosure documents, industry figures argue.
It follows concerns European regulators will impose the rule on the continent shortly after the introduction of the RDR, potentially forcing the FSA to revise its Handbook.
Under current RDR legislation, adviser will only need to disclose to clients the cost of advice, the product charge, and the cost of any ongoing services.
But a compulsory TER breakdown - as part of the product charge - may also include the costs for other services paid for by the fund, such as fees paid to the trustee, custodian, auditors and registrar. All this as well as a manager's annual charge and any wrap or platform costs.
Industry figures say the adviser charging proposals are so far removed from the current "near-zero transparency" rules, a further breakdown of charges will only confuse consumers.
Martin Bamford, managing director of Informed Choice, says: "The adviser charging proposals already go so much further than anything we have at the moment.
"You'll always get some clients that will want to go to the nth degree, but separating the advice costs from the product charges was the key and most consumers will be happy with that."
Legal & General (L&G) RDR and commercial director Danny Wynn adds: "The TER, as it stands, will be a single figure. If they break it down any further it will only confuse consumers.
"Why does the customer need to see that? A fund is a commodity and in what other world do you need to break down the cost of a commodity?"
The Association of IFAs (AIFA) says it fears the costly moves by providers and advisers to be RDR-compliants could prove a "multi-million pound waste".
It says European regulators are keen to include blanket TER rules into their work on Packaged Retail Investment Products (PRIPs) as well as the Markets in Financial Instruments Directive (MiFID).
Director general Chris Cummings says the FSA must be certain of its plans before it introduces its final recommendations.
"We are concerned it will be the TER in Europe and adviser charging in the UK. While we know adviser charging will bring clarity, it is still a long way away from the TER.
"MiFID and PRIPs are set to come in just a year to 18 months after RDR and we are really concerned the multi-million pound investment in adviser charging could be wasted.
"Some providers will have to spend somewhere between £20m and £40m on IT costs alone. The FSA must not introduce half a solution into the market."
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