To get perspective on international regulations and how those regulations are affecting constituents around the world, the Investment Funds Institute of Canada (IFIC) convened an international regulations panel to be part of its 2023 Annual Leadership Conference

In the discussion, representatives from the United States, the United Kingdom and Canada examined regulatory developments occurring in their respective countries. When it comes to total cost reporting (TCR), for example, there would appear to be a spectrum of responses on the part of regulators – with TCR or individualized cost reporting regulation stalled out due to operational concerns in the United States while being somewhat advanced and fully implemented in the United Kingdom. 

The UK’s experience would appear to be notable with cost reporting regulation being more advanced and developed. “I would say we are now totally transparent in terms of all the key components, both in terms of the professional services that are involved in delivery and all of the underlying capital market costs that are experienced in delivering the return,” says Jonathan Lipkin, director of policy, strategy and innovation with the Investment Association (IA) in the United Kingdom.

He adds that the data is provided in machine-readable frameworks by managers, which is then recombined by advisors and others down the value chain. “People break it down in different ways. There’s a degree of flexibility about how you display those numbers. I think that’s incredibly important. One of the things we’ve discovered is that there is an understandable desire for a single figure,” he adds.

“We just want to know the price. So I think, for the industry, we recognize that aspiration on the part of our customers. We recognize where it’s coming from for policymakers and regulators. But at the same time, we’ve said we also need to be careful that when we’re adding up different numbers, that we’re not adding up apples and pears and reaching a conclusion that ultimate is not quite the single number you think it is.”

In Canada, firms have until December 31, 2023 to implement TCR enhancements spelled out in final changes to enhanced cost reporting disclosures for investment funds and individual segregated fund contracts, published April 20, 2023.

“I am quite certain we’re not going to be granted any more time,” says Shalomi Abraham, senior vice president and head of legal in Canada and assistant general council of the Americas with Invesco Canada Ltd. “The deadline is what it is and we’re going to have to figure it out.”