FMA ups the ante on value-for-money project, won’t back down on original guidance
Since the report was published in May, the regulator has circulated a separate discussion document, providing more detail on the key areas where the FMA wants to see change: performance fees, trail commissions and transparency.
Obtained by Good Returns under the Official Information Act, the report has not been published on the FMA’s website. It appears to represent the regulator’s thinking after receiving feedback on the pilot report, fleshing out its arguments and adding numbers to illustrate these points.
The tone of this discussion paper is calmer and less aggressive than that of the May report, which has encountered serious pushback in some quarters.
But the FMA has not backed down on its basic requirements: that fund managers should measure their performance against an appropriate market index, that trail commissions paid to third parties who introduce new members should not be embedded in a general management fee and charged to all members (including those who joined the scheme direct), that financial advice to members joining via intermediaries must be ongoing and that full transparency is required in the way fees and commissions are reported back to members.
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