CFA Institute members would rather see fee transparency than an outright ban of sales inducements, according to an institute survey.
The main cause of selling inappropriate products, according to 70 percent of survey respondents, is remuneration structures biased towards volume sales or specific products.
The three most common solutions to the problem that respondents selected were introducing clear standards for cost disclosures, revising commission structures to eliminate those that encourage volume sales, and setting equal commission levels as a percentage of the management fee for all products in the same category.
"Transparency should be part of any solution aimed at addressing mis-selling because simplified disclosures would give investors the information they need to make informed decisions. It is also important to pursue uniformity in fee disclosures across jurisdictions to allow comparability of fees across markets,” says Matt Orsagh, director of capital markets policy at the CFA Institute.