The investment sector has welcomed the news that that cost disclosure requirements for investment trusts will be temporarily banned.

The announcement, by the Treasury and the Financial Conduct Authority yesterday (20 September), comes following years of investment companies calling for change.

These rules were inherited by the European Union (EU) and made it appear that investment trusts were more costly to put money into than they were.

This is because the disclosure rule requires trusts to publish the costs of financing, operating and maintaining real assets.

However, many of these costs are already published in regular company updates and reflected in the value of the share price for all investment companies.

This created a “double counting of costs”, which investment trusts have long been saying has put investors off.

Although £15bn of new money went into investment trusts in 2021 alone, it is estimated the double counting rule was seeing £7bn a year in income being lost.

The Treasury said it will lay out legislation to provide the FCA with the appropriate powers to deliver reform – the new Consumer Composite Investments (CCI) regime.

It said the new CCI regime will deliver more tailored and flexible rules to “address concerns across industry with current disclosure requirements, including for costs.”

The UK’s new retail disclosure regime is expected to be in place in the first half of 2025, subject to Parliamentary approval and following a consultation from the FCA.

The FCA intends to consult on proposed rules for the CCI regime this Autumn.

The Association of Investment Companies (AIC) chief executive Richard Stone described it as “great news”.

He said the AIC has lobbied tirelessly on the issue and praised the Labour government for “acting so swiftly”.

Stone added: “Investment companies are a great UK success story and have a vital role in bridging the gap between private assets and public markets.

“Ending misleading cost disclosures will enable us to continue delivering for investors and make a critical contribution to the economy as the government drives forward its ambitions for growth, investment and wealth creation.”

Abrdn head of closed-end funds Christian Pittard said: “We welcome this move by government and the FCA to address unfair and distortive rules that have crippled investment trusts.

“With the FCA confirming that it will not take supervisory or enforcement action if a fund chooses not to follow the cost disclosure requirements, all eyes will now be on data publishers at a time when what the industry and investors really need is consistency.”

Pittard also labelled the UK investment trust sector “one of the jewels in the crown of the financial services industry.

This announcement came following research from Abrdn that revealed London listed closed-end infrastructure investment companies are on track for their first ever three-year gap with no primary capital raised.

Abrdn blamed this on a higher interest rate environment and the cost disclosure rules, with 2023 and 2022 both being fallow years for primary fundraising.

AJ Bell interim investments managing director Ryan Hughes agreed that this news will be “warmly welcomed by both the investment trust industry and broader market participants”.

Hughes added: “Investment trusts play a hugely important role both in the financial services sector and the wider economy as a provider of capital and the unintended consequences of the current legislation created an unequal playing field that put investment trusts at a disadvantage and threatened, in some cases, their very existence.

“The removal of this unnecessary barrier will help the investment trusts sector regain its footing and allow them to compete equally against other investment structures, which will put them back on the radar for investors who have been reluctant to use them given the cost disclosure requirements.”

In the week before the Treasury and the FCA made this announcement,

What is Fintech?

Fintech is short for Financial Technology, a term which describes the technology used to simplify and improve financial services. This includes mobile banking, investing apps, cryptocurrency and more. Fintech was created to bring convenience to your everyday financial processes for businesses and consumers. Without knowing it, you have and are using fintech in your everyday finance management.

What does Fintech do?

Fintech is useful for businesses and consumers alike.

From payment solutions to investment platforms, fintech also makes financial services more inclusive by lowering barriers to access. For instance, many fintech applications offer no-fee bank accounts, fractional share investing, and peer-to-peer lending platforms, giving consumers more opportunities to grow their wealth.

For businesses

fintech tools can improve operational efficiency by automating payroll, invoicing, tax filing, and even financial forecasting. It enables companies to streamline their financial workflows, reduce administrative costs, and free up time for more strategic tasks.

For Consumers

Consumers benefit from fintech by having more control over their financial lives. With the rise of personal finance apps, users can track spending, set savings goals, and monitor investments in real-time. The tools provide a complete view of personal finances, helping individuals make informed decisions based on data-driven insights.

What is Fintech used for?

Fintech operates through apps on computers and phones, bringing financial services to us. This is used in various ways including…

Robo-Advisors – Helping people create investment portfolios based on their personal goals and risk tolerance. This offers affordable and simple wealth management solutions for consumers

Payment apps – Such as, PayPal, Venmo and Apple pay make it possible and easy for every to send, receive and manage money from our phones. There are various advantages of using PayPal. They eliminate the need for cash and checks for any payments including international.

Peer-to-peer lending – Platforms such as, LendingClub allow consumers to lend money to others without using banks as intermediaries. This can often provide both parties more favourable rates.

Investment apps – These platforms make is accessible for more people to start investing. They offer resources and advice for novice investors so that more people can grow their wealth. Find trading platforms you can use to start.

Cryptocurrency Apps – Blockchain, the primary technology for most cryptocurrencies, is a significant aspect of fintech, representing a reorganised way to conduct financial transactions outside traditional banking systems.

Examples of Fintech in Everyday life

Fintech has become a part of daily life for many consumers, even if they’re not aware of it. Here are a few common ways consumers interact with fintech:

• Mobile Banking – This convenience has transformed the way people interact with their banks, minimising the need for physical branches. These apps allow us to send, receive and manage our money instantly from our phones.
• Budgeting –. Budgeting apps have become a popular way to track your money and set saving goals you can stick to setting your priorities in place. These apps sync with your bank accounts and credit cards, offering a broad view of your financial health in one place. You can find free budgeting apps to help.
• Credit monitoring – Tools like Experian allow users to monitor their credit scores and reports so that they can keep on top of their records and know where they need to improve. With this you can find out the average score and where you fall within it.

Impact of Fintech on personal finances

Whether you’re using a simple payment app or diving into cryptocurrency trading, fintech brings the tools for managing your finances right to your device. Consumers now have access to tools that explain investment options, track spending habits, and create budgeting plans.

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The global economy is facing rifts comparable to the pressures that resulted in “economic nationalism”, a collapse in global trade and the Great Depression of the 1920s, the president of the European Central Bank has warned.

“We have faced the worst pandemic since the 1920s, the worst conflict in Europe since the 1940s and the worst energy shock since the 1970s,” said Christine Lagarde on Friday, adding that these disruptions combined with factors such as supply chain problems had permanently changed global economic activity.

In a speech at the IMF in Washington two days after the Federal Reserve cut interest rates by 50 basis points, pushing US equity markets to record highs, the ECB president argued that several parallels “between the “two twenties — the 1920s and 2020s — stand out”, pointing to “setbacks in global trade integration” and technological advances in both eras.

While monetary policy in the 1920s made matters worse as adherence to the gold standard pushed leading economies into deflation and banking crises, “we are in a better position today to address these structural changes than our predecessors were”, stressed Lagarde.

A century ago, she said, central bankers learnt the hard way that pegging the currency to gold and fixed exchange rates was “not robust in times of profound structural change” as it pushed the world into deflation, fuelling “economic malaise” and contributing to a “cycle of economic nationalism”.

Today, central bankers’ tools for preserving price stability “have proved effective”, she said. Lagarde pointed to the quick fall in inflation once central banks started to raise rates in 2022. Consumer prices had shot up following a surge in post-pandemic demand, global supply chain disruptions and big rises in energy prices after Russia’s full-scale invasion of Ukraine.

She described the episode as an “extreme stress test” for monetary policy.

Central bankers have been able to ease monetary policy in recent months as price pressures abated. Annual inflation in the Eurozone peaked at 10.6 per cent in October 2022 but hit a three-year low of 2.2 per cent in August.

Lagarde said it was “remarkable” that central banks managed to get inflation under control within less than two years while avoiding a rise in joblessness. “It is rare to avoid a major deterioration in employment when central banks raise rates in response to high energy prices. But employment has risen by 2.8mn people in the euro area since the end of 2022,” she said.

However, the ECB president warned against complacency, saying that issues including possible setbacks to globalisation, a partial disintegration of global supply chains, the market power of tech giants such as Google and the “rapid development of artificial intelligence” could all test central bankers.

Uncertainty would “remain high” for monetary policymakers, Lagarde said, adding: “We need to manage it better.”

The ECB will investigate these issues in detail in its looming strategy review, she said. While its 2 per cent medium-term inflation target would not be scrutinised, “we will consider what we can learn from our past experience with too-low and too-high inflation”, she said.

The ECB would also analyse its assessment and disclosure of risks. For example, its baseline inflation scenario could be “balanced . . . with real-time information”, and the central bank could also disclose alternative scenarios.