Aberdeen, the Edinburgh-based investment giant, has strongly recommended that investment trust companies be excluded from proposed Consumer Composite Investments (CCI) rules on new retail disclosures, or ring fenced in the CCI regime.

Aberdeen is one of the largest managers of investment trusts globally, with almost £20 billion of assets. It total, Aberdeen manages and administers £511 billion of assets.

The Association of Investment Companies (AIC) also reiterated its call for investment companies to be excluded from the CCI regime, or ringfenced within the regime and no additional obligations or disclosures imposed.

Aberdeen said it believes there should be “no additional rules or disclosure obligations over the existing market rules and relevant industry-driven standards such as the Statement of Operating Expenses (SOE) which has been developed by participants from across the industry, and which Aberdeen was the first to roll out.”

Aberdeen said it “strongly objects” to any form of aggregation of costs for investment trusts to provide misrepresented information to the consumer. The alternative Aberdeen proposal is to disclose relevant costs and charges with “appropriate” context.

AIC CEO Richard Stone said: “Investment companies should be excluded from the new retail disclosure regime.

“The new rules would be an unjustified burden on our sector, and place investment companies at a competitive disadvantage. It is not too late for the government to legislate to exclude the sector or for the FCA to create a ringfence so that no additional obligations are imposed on investment companies …

“Existing disclosure requirements for investment companies are already stringent, including the UK Listing Rules and accountancy rules.

“We must take the opportunity to overhaul failing EU-derived regulation and create a better disclosure regime for investors.

“This would return the sector to the position before 2018 where investors were given all the information they needed to make informed decisions and investment companies were able to compete fairly on their merits against both trading companies and funds.”

Aberdeen said: “Today, Aberdeen, one of the largest managers of investment trusts globally, responded to the FCA’s Consultation Paper 24/30 – A new product information framework for Consumer Composite Investments.

“While Aberdeen’s formal response covers the CCI regime broadly, and there are many aspects of the broader consultation in which Aberdeen is supportive, this press release relates entirely to  the treatment of UK Listed Closed Ended Investment Companies [investment trusts].

“Aberdeen welcome the FCA’s efforts to resolve historical disclosure requirement issues, which have plagued the UK listed closed end fund sector in recent years.

“This latest consultation is likely the last chance to ensure investors in UK Listed Closed Ended Investment Companies [investment trusts] are given relevant and accessible information on charges, without the ‘double counting’ of costs which has been so damaging over the past few years.

“It is Aberdeen’s strong recommendation that investment trusts should be excluded from the Consumer Composite Investments (CCI) rules, or ring fenced in the CCI regime.

“Aberdeen believes there should be no additional rules or disclosure obligations over the existing market rules and relevant industry-driven standards such as the Statement of Operating Expenses (SOE) which has been developed by participants from across the industry, and which Aberdeen was the first to roll out.

“Aberdeen strongly objects to any form of aggregation of costs for investment trusts to provide misrepresented information to the consumer. The alternative Aberdeen proposal is to disclose relevant costs and charges with appropriate context.”

Christian Pittard, Head of Investment Trusts and Managing Director of Corporate Finance, Aberdeen, said: “This is about providing investors with more information and improved disclosure, in the spirit of meaningful transparency. Investors deserve nothing less.

“The simple fact is that the costs of managing open and closed ended structures are fundamentally different and not directly comparable. Operating costs are not a deduction from investors value in an investment trust, as they are already incorporated in the share price.

“Much has been said about the existential crisis facing investment trusts, which have delivered capital at scale into productive assets, so key to the UK’s growth agenda, for generations.  The cost disclosure rules have been the single biggest barrier to competitiveness, both amongst listed peers and internationally. Inclusion in the CCI rules would perpetuate this further …

“It is investment trust shareholders who have paid the real price for the confusion. Discounts remain far too wide, choice shrinks as investment trusts consolidate, and confusion around charges prevails, eroding confidence and compromising investor outcomes. This is a sector that has played a key role in powering the portfolios of retail investors over the long-term.”