For Immediate Release: Thursday 10 May 2001

AUTIF CHAIRMAN CALLS FOR GREATER INDUSTRY TRANSPARENCY 

Speaking at the Association of Unit Trusts and Investment Funds’ Annual General Meeting dinner yesterday, Alan Ainsworth, the retiring Chairman of the Association, called on the industry and its regulator to make a significant difference to investor understanding and confidence, by addressing three main issues:

• The need for a clear regulatory definition of investment advice and disclosure of the nature of the advice relationship
• The need to develop a standardised and simple measure of total investor costs
• The importance of adhering to a standard, simple form of past performance disclosure.

Mr Ainsworth commented:

"The recent volatility in equity markets underlined the importance of investor confidence and understanding to our business. The future of the industry depends on building a client base that understands the risks associated with long term returns. As, indeed, must Government, if its policy of encouraging self-reliance through long-term saving is to be successful.

Mr Ainsworth recognised that the industry had a tradition of providing transparent products, but suggested that it was now a good time to think about the need to apply the idea of transparency more broadly. In particular, he identified:

"The most important fund transparency issue is the role of past performance. It has to be one part of product transparency, but not if used selectively. And the investment funds industry has been guilty of selective transparency in the use of performance statistics. All the evidence I have seen leads me to believe that this industry should standardise on discrete annual performance over given periods, preferably not less than 5 years."

Alan Ainsworth has now completed his term as Chairman as AUTIF and is succeeded by Alan Burton, Managing Director of Standard Life Investments (Mutual Funds) Ltd, who was appointed at the AGM held that afternoon.

For further information please contact:

Alan Ainsworth +44 (0)20 7464 5739
Richard Saunders, Director General, AUTIF +44 (0)20 7831 0898
Anne McMeehan, Director of Communications, AUTIF +44 (0)20 7831 0898
Clare Arber, PR Manager, AUTIF +44 (0)20 7831 0898

Attachment (copy of full speech)