The Jersey Financial Services Commission has raised concerns over some investment firms not clearly explaining third party fees and are not consistently applying fee reductions due to a lack of clear processes.
In a letter published today (11 March) following a review by the regulator, it said it had seen evidence of suitability letters containing a clearly identifiable section on fees and charges, supported by easy‑to‑understand table summaries outlining all applicable costs.
However, in its feedback letter, it said it had identified some areas for improvement, particularly around unclear fees and processes around fee reductions.
“Suitability letters did not clearly explain third‑party fees, such as those charged by the underlying fund provider. In some cases, third‑party documents were given to clients without explanation of how those fees applied,” it said.
“Fee reductions were applied inconsistently due to a lack of clear processes, rationale, and documentation. This means customers may not be treated consistently and fairly and it may make it harder for the firm to show it acts in the best interests of all clients.”
The regulator has asked firms to consider whether they regularly review their template documents to ensure they remain clear and easy to understand, and to regularly review policies and procedures to ensure they “clearly set out [their] requirements relating to fees and charges and remain aligned with relevant legislative and regulatory obligations”.
This includes ensuring staff are regularly trained on these requirements.
