Is “super clean” even clean enough?

No sooner had the regulator thought the little collusion with HMRC had sorted the clean fund issue when we quickly came up with super clean.   It’s hard to understand why most people don’t get financial services isn’t it.

I should point out though the notion of super clean itself isn’t actually an issue. It has existed for years anyway and the idea of driving down fund management costs is in itself a good idea. You could argue we should all be getting behind Standard Life and Skandia and creating some downward pressure on fund prices.

The issue I have is one of total cost of ownership and overall transparency, and consistency.

I think this gives some companies an opportunity to really take a lead here. If funds are super clean but product charges require actuarial degrees to work out then is that good outcomes?  If mutual funds are clean, but insured funds still have all the black art and rebates hidden, does that stack up?

I think there needs to be consistency across the board here, you can’t claim to be all about transparency and customer benefits on some things, but then stop short on others, either because its hard to do, or gets less press.

There is no doubt the taxing of rebates has been badly handled by HMRC and FSA, but there is a chance it could lead to better (cheaper) client outcomes. But only if the chest beating or green eyed monsters let differences be put to one side and the industry as a whole works together to lower these costs.

And by lowering, I don’t mean headline price down and expenses up, which seems to have crept in as we all rush to say we are clean.

And then, lets not stop short, lets make it all easier to understand and measure cost v value.  Make it easier to move the money –  someone really needs to get to grips with re-registration.  Signing up to TISA one day and creating huge confusion around share class proliferation the next doesn’t really stack up either.

When we focus on these issues maybe then we could claim to be clean, super clean or maybe just plain fair.

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2 thoughts on “Is “super clean” even clean enough?

  • The big thing that most commentators on ‘clean’ (i.e. reduced AMC) and ‘super clean’ (even more reduced AMC) seem to forget is the associated extra cost, both at introduction (which needs to be repaid) and ongoing for a separate share class. These numbers should be reflected in the total ‘ongoing costs (what used to be TER) which should vary by share class. Unless fund managers spread costs over the whole fund and not against specific share classes (hardly TCF) the effect of the extra charges will be enough to severely reduce or even eliminate the reduced AMC. Such is the mess that the combined incompetence of the FSA/FCA and HMRC have got us into.

    Reply
  • The big thing that most commentators on ‘clean’ (i.e. reduced AMC) and ‘super clean’ (even more reduced AMC) seem to forget is the associated extra cost, both at introduction (which needs to be repaid) and ongoing for a separate share class. These numbers should be reflected in the total ‘ongoing costs (what used to be TER) which should vary by share class. Unless fund managers spread costs over the whole fund and not against specific share classes (hardly TCF) the effect of the extra charges will be enough to severely reduce or even eliminate the reduced AMC. Such is the mess that the combined incompetence of the FSA/FCA and HMRC have got us into.

    Reply

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