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PSCD FAQs

Ex-post costs and charges disclosure

Your questions answered

In 2018, our regulator introduced new rules that require investment management firms to provide more information about the costs and charges that apply to certain securities. This drive for greater transparency is actively supported by ii as openness is an important factor in building trust between firms and their clients and helps maintain an appropriate focus on costs.

ii has made available an example statement that will tell you about the costs and charges borne by yourself with regard to the management and administration of your investments and the impact they have had on their performance.

Committed to transparency and improved communication

We believe that providing greater transparency on costs is a positive step for you and the wealth management industry. It means that you can better understand all of the costs that are associated with some of your securities and the impact they have on investment performance. 

What is it?

What is an ex-post costs and charges disclosure?

In line with the new rules, Retail Brokers such as II are obliged to provide clients annually with information about the actual costs and charges incurred on some of their securities. The provision of this information is known as an ‘ex-post costs and charges disclosure’.

What is the purpose of an ex-post costs and charges disclosure?

An ex-post costs and charges disclosure is all about providing costs and charges incurred from trading or holding certain investments. The Regulator’s intention is to direct the industry to be transparent with customers which ii fully endorses.

What is the difference between an ex-ante costs and charges report and an ex-post costs and charges report? 

An ex-ante costs and charges report is a reasonable estimate of costs before they are incurred, whereas an ex-post costs and charges report discloses the actual costs after they have been incurred within a portfolio. 

From the 3 January 2018, we have been obliged to provide an ex-ante report, known as a cost disclosure ahead of placing an order with ii, to enable you to be fully informed about the potential costs of committing to a transaction.

What does it look like and when is it happening?

How will the costs and charges be presented?

Please see the example provided and notes on what key figures are and how they have been calculated.

 

When will the ex-post costs and charges be published to clients?

Information will be calculated for the calendar year ending 31 December 2018 and annually thereafter. As such, we are aiming for you to receive the ex-post costs disclosure for the first time in early May 2019.

How will I receive my ex-post costs and charges report?

This will be uploaded into your document history which can be found within your account link and notifications sent via your chosen method of communication.

What investments will I receive information for? 

Costs and charges information will be provided at financial instrument level. As such where you hold two or more relevant instruments you will see a breakdown for each one. We will be providing information for instruments in line with the regulations which include Funds, ETFs & Investment Trusts. We will not be producing documents for Equities & Defunct Stock. We will also not be sending a cost disclosure for Company Warrants unless there has been a trade in 2018. This is because that there are no costs to apply and therefore there will have been no impact to the investment.

What about the numbers?

What costs and charges need to be disclosed? 

Information needs to be provided about all costs and charges incurred by yourself for trading and holding certain investments. This includes both II’s, product manufacturers and all other costs and charges associated with the investment. Other costs and charges include Stamp Duty, and tax on dividends.

What are product manufacturers and distributors?

A manufacturer (e.g. Fidelity) is a firm which creates, develops, issues and/or designs investments. A distributor (e.g. ii) is a firm which provides investment services to customers.

Are there any other costs and charges that are excluded? 

Yes. The new rule is only concerned with the costs associated with the provision of the investment services. Although II levies charges for services such as our quarterly charges, Clearing House Automated Payment System (CHAPS) fees and debit interest, these are not included within the ex-post costs disclosure.

Are government charges included in the figures? 

Yes. Where applicable Government charges such as income tax, stamp duty and VAT are included.

What data is used to compile underlying investment holding costs? 

ii calculates figures based on the information that is available to us from our data supplier Morningstar, that they obtain from the manufacturer of each investment.

Further information in respect of manufacturer costs and charges.

a. In general, product manufacturers have provided an ‘effective from’ date alongside the % cost to be applied, but in some cases this date does not cover all of 2018. However, to be able to meet the requirement to provide an illustration for the whole year, we have assumed that this rate should be applied to the whole of 2018 and we have based our calculation on this assumption. The effect of this is that, in some cases, we are effectively providing you with an estimate for part of the year. In general, we do not consider that this estimate will differ materially from the actual figures.

b. Non European Union providers have no obligation to comply with the new rules. As such data has been sourced on a best endeavours basis using published information.

c. In relation to Real Estate Investment Trusts (REITS) only those classified as Alternative Investment Funds are captured under the new rules.

In a very small number of cases we have been unable to source data from Morningstar or directly from the manufacturers. In these scenarios we have used a proxy based upon a sector average of similar instruments.

For more information on MiFID II regulations, please visit our Help Centre.