Consultation outcome

Annex F: Non-exhaustive list of costs and charges

Updated 21 June 2021

In scope of the default fund charge cap

Administration costs

• set-up fees
• costs of member communication services, for example statement costs, website, printing/ posting accounts
• ongoing costs for running of scheme, for example information technology (IT), office and staffing costs, data management and record keeping, marketing and distribution
• scheme-level entry fees; both on entry into, or on transferring in a pre-existing pot
• scheme-level exit charges
• banking fees
• fees and expenses charged in relation to the creation or operation of any funds or collective investment schemes
• scheme level payments to providers of professional services and other third parties, or fees for related services, for example administrators, advisers, actuaries, lawyers, auditors, accountants, compliance and litigation

Governance and regulation costs

• registration and regulatory costs and fees
• fees paid to governance bodies, for example trustees, Independent Governance Committees (IGCs) and others
• governance charges and expenses, for example trustee insurance

Investment costs (except as permitted in relation to physical assets)

• fund or investment management fees, including payments to investment consultants and fiduciary managers, underlying, separate and in-house fund managers, performance fees, research, engagement and proxy voting advisers
• ongoing charges for underlying funds in investment portfolio, for example fee for holding units in a Undertakings for Collective Investment in Transferable Securities (UCITS), Non UCITS Retail Schemes (NURS) or qualified investor scheme (QIS) fund or investment trusts classified as closed-ended investment funds under listing rules
• ongoing charges for unit-linked contracts of insurance
• fees (excluding transaction costs) for non-member-initiated switching of funds
• investment level payments to providers of professional services and other third parties or fees for related services, for example investment governance, advisers, audit and legal fees, valuation services, levies, compliance and litigation costs
• costs of third party financial guarantees for example capital guarantees
• depositary fees and fees to the custody bank (excluding transaction costs)
• platform fees
• unrecoverable value-added tax (VAT)
• (private equity) carried interest, unoffset monitoring fees and directors’ fees 

Excluded from the default fund charge cap

Transaction costs

• dealing commission and fees, including payments for other goods and services provided in return, for example research
• transaction taxes, for example stamp duty and capital gains tax
• spreads, for example bid-offer on bonds, foreign exchange (and associated costs such as commission)
• dilution levy, fund-level spreads and the costs resulting from swing pricing
• other charges embedded in the transaction price, for example payments incurred through financial derivative instruments
• custodian transaction costs (‘ticket fees’)
• deductions of expenses or fees from income earned by other transactions relating to the underlying assets, for example stock lending, foreign currency exchange
• physical assets transaction costs for example lease renewal fees
• (private equity) unoffset transaction fees, including underwriting fees and success fees

Taxes

• non-reclaimable withholding taxes on income, dividends and interest

Costs solely attributable to holding physical assets

• property management and maintenance costs
• valuation fees
• void costs
• insurance
• ground rent charges
• rates and taxes

Other exclusions

• underlying costs of listed companies which are not classified as a closed-ended investment fund under listing rules, for example the wages paid to staff in a retail store
• costs of winding up the scheme
• costs incurred in complying with a court order
• permitted charges in respect of pension sharing costs
• costs solely associated with the provision of death benefits