For immediate release: Tuesday 26 April 2005

IMA WELCOMES FSA FLEXIBILITY ON SIMPLIFIED PROSPECTUS RULES
- but disappointed by continued use of reduction in yield calculations

IMA welcomes yesterday’s news from the Financial Services Authority that it has modified its proposed rules and guidance on implementing the UCITS Simplified Prospectus.

The rules will help fund managers to provide investors with clear and easy to understand information about collective investment schemes and will create a level playing field for funds across Europe. The IMA welcomes the detailed modifications that have been made in the light of consultation.

The Association, however, remains disappointed at the FSA’s decision to include reduction in yield (RIY) calculations as well as total expense ratios (TERs) for funds marketed in the UK and fears that the inclusion of two different measures of cost will not help investors.

It is pleased with the decision to drop RIY calculations for funds sold across Europe, ensuring a level playing field with non-UK funds, and the inclusion of a ‘sunset clause’ for RIYs in 2009.

Richard Saunders, Chief Executive of the IMA commented:

“The TER is the international standard for disclosing the cost of investing and we believe it is the simplest and clearest for consumers. RIY is much harder to understand and explain, and its continued use in addition can only serve to confuse – as well as gold-plating the European Directive. The promise of a ‘sunset’ clause and a review in three years is therefore to be welcomed, but we would have preferred to see RIYs, which require an arbitrary assumption about future rates of return, dropped altogether.  We look forward to working further with the FSA on these questions.”

IMA’s response to CP04/18 - Implementation of the Simplified Prospectus is attached.  

-Ends-

For further information please contact:
Helen Stephenson, Communications Officer, IMA  020 7831 0898

Out of hours contact:
Mona Patel, Head of Communications, IMA   07834 089332