Two-thirds of investment shops ‘fail to publish full details of fees’

The vast majority of fund groups, investment “shops” and wealth managers do not openly declare the full extent of their charges, research has revealed.

Since the start of the year EU law has forced firms to disclose to new customers the full range of fees they can expect to pay, and the impact they will have on returns. The rules, known by the obscure acronym “Mifid II”, are intended to boost transparency in the infamously opaque investment management industry. However, research by SCM Direct, a wealth manager, found most firms were still disclosing only bare minimum details on fees on their websites.

SCM Direct – run by couple Alan and Gina Miller, the latter best known as a prominent Remain campaigner – posed as potential customers at 75 companies, which in turn manage more than £1 trillion of assets.

It found that only 30pc of fund shops showed all the aggregated costs and charges before an account was opened. Even fewer wealth managers (22pc) and none of the new breed of “robot advisers” revealed the full extent of charges, SCM said.

Around four in 10 fund groups made full disclosures, with the remainder doing so only after being asked via email or third parties. It is not a legal requirement to show comprehensive fees on websites. It is disclosure “at the point of sale” that the EU requires. SCM has called on the Financial Conduct Authority, the City regulator, to ban or fine firms found not to be complying.

Mrs Miller said: “It is scandalous that so many firms appear to have chosen to flout legislation that was specifically brought in to afford retail investors more transparency and clarity and to allow them to know the true full cost of their investment.” The FCA said the EU directive “does not stipulate that firms are required to display costs and charges in a standardised format”.