Investment Fees and Charges

The General Code of Conduct for Authorised Financial Services Providers and Representatives (‘the Code’) provides in Section 3, that a Financial Services Provider (‘FSP’) must reflect all amounts, sums, values, charges, fees, remuneration or monetary obligations, payable in specific monetary terms. In addition, Section 7 (c) (bb) of the Code also provides that there must be a separate disclosure (and not merely disclosure of an all-inclusive fee or charge) of any charges and fees to be levied against an investment, including the amount and frequency thereof.

Whilst this may require FSPs to disclose fees, thereby making potential clients more aware of the existence of these fees and charges, the reality is that a 1% charge is monetary equivalent and may not seem like a significant amount; however, the potential impact over an investment period of 10, 20 or even the compounded effect of fees and charges over the duration of an investment can be significant, so it is important that FSPs not only disclose fees and charges in specific monetary terms but that the impact of those fees and charges on the investment and implications thereof on the ultimate performance must be disclosed as well to allow the client the opportunity to really make an informed decision.