FCA Cites Nutmeg As Good Example Of Fee Disclosure

The regulator has praised the way the ETF-focused discretionary manager shows its value and charges to customers

Editor, etf.com Europe
Reviewed by: Rachael Revesz
Edited by: Rachael Revesz

The Financial Conduct Authority (FCA) has cited Nutmeg as an example of a money manager firm that displays its charges and value to customers clearly and transparently, setting a high bar for other firms to follow for the benefit of the end investor.

The ETF-focused discretionary fund manager Nutmeg was mentioned in an FCA discussion paper, published today, called Smarter Consumer Communications, and was praised for its disclosure of full costs.

The FCA is concerned about investors’ lack of understanding when it comes to the effects of compounding charges, and said: “While this can be a difficult concept for some consumers to understand, presenting this graphically with a clear explanation could help. Nutmeg, for example, seeks to do this when explaining its fees and charges.”

Nutmeg is one of the few asset managers to disclose its performance results net of management fees. It was launched in October 2012 and has not yet disclosed its assets under management, but allows investors to access a diversified ETF portfolio for as little as £1,000.

In the FCA report, three recommendations for money managers were made: to tell investors their total costs, alert them to additional charges and enable them to consider “all the relevant factors” when shopping around.

“Of course, simply disclosing cost information does not necessarily empower consumers to make effective decisions,” the report added. “This information should be presented clearly, disclosed at an appropriate time and provided through a suitable medium.”

Rachael Revesz joined etf.com in August 2013 as staff writer. Previously an investment reporter at Citywire, she has a background in writing content for retail financial advisors and has covered a wide range of subjects in finance. Revesz studied journalism at PMA Media, which has since merged with the Press Association. She also holds a B.A. in modern languages from Durham University, as well as CF1 and CF2 financial planning certificates from the CII.