09/12/2025
In a highly-welcomed announcement, the Financial Conduct Authority (FCA) ruled yesterday that investment trusts will no longer need to factor in extra operating costs to their ongoing charges figure (OCF) under new Consumer Composite Investment (CCI) rules.
Richard Stone, CEO of the Association of Investment Companies (AIC), noted: ‘This removes a cloud that’s been hanging over the industry and returns the market to a pre-2021 ongoing charge figure that everyone used and understood. It’s particularly helpful for fund of funds managers whose products were made to look artificially expensive under the PRIIPs rules.’
The key changes and their expected impact on transparency include:
- Ending "Double Counting": Under the new rules, investment trusts will no longer have to include these extra operating costs in their OCF. This change is expected to return the market to a more widely understood cost figure and remove a "cloud that’s been hanging over the industry" .
- Eliminating "Pull-Through" Charges: Funds of funds that invest in trusts will no longer need to "pull through" the underlying trust's charges, a practice that made them look expensive and discouraged institutional buyers .
- Replacing Key Information Documents (KIDs): The FCA will drop the "rigidly prescribed" Key Information Documents, which it found were often unengaging, filled with legal jargon, and generally unread by consumers. Instead, firms will have more freedom to design their own product summaries .
- Promoting Clearer Communication: The FCA is encouraging asset managers to use this new flexibility to communicate information, including fees, more "simply and clearly." The regulator stated, "We have stripped away excessive templating and prescriptive documents, giving firms freedom to innovate and deliver engaging communications to consumers" . This is expected to increase engagement from retail investors and help build a stronger investment culture .
The reforms are scheduled to take effect on June 8, 2027, with a transition period beginning in April 2026. The expectation is that these changes will resolve the confusion that has damaged the sector and ultimately lead to a more transparent and accessible investment market for all.
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