The Financial Conduct Authority (FCA) should swiftly review and reform the post-sale cost disclosures that come under the Markets in Financial Instruments Directive (MiFID) rules, according to the Association of Investment Companies (AIC).

It called on the FCA to reform post-sale cost disclosures “without delay” and emphasised that pre- and post-sale disclosures must be aligned to protect consumers.

AIC chief executive, Richard Stone, argued that while the regulator announced how pre-sale disclosures will change last month, consumers who buy an investment would be left confused unless the post-sale rules are reformed quickly.

The costs consumers are shown after making an investment will be different to what they expected based on the pre-sale information, he noted, which could undermine confidence in the disclosures and impact the government’s aim of creating an investment culture.

The FCA reformed pre-sale disclosures as part of its new rules for consumer composite investments (CCI) but it is yet to reform post-sale rules.

The AIC warned that cost disclosures for consumers who have purchased an investment would be very different to the cost disclosures they received before buying without post-sale disclosure reforms, as post-sale cost disclosures will continue to bundle together the costs of investments, advice, and custody, while the pre-sale disclosures will present an ongoing costs figure.

Stone encouraged the FCA to confirm the timetable for MiFID reforms and start consulting without delay, using the changes being made to pre-sale disclosure as a starting point.

“We think this process needs to be completed as soon as possible so that all cost disclosures are made on the same basis and the deadlines for adopting both pre-sale and post-sale disclosures are aligned,” he continued.

“The FCA’s recently published regulatory plans for the next two years do not even mention reforming these rules. This issue can’t be allowed to drift. We need the FCA to act quickly.”

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