UCITS costs and fees – ESMA launches a Common Supervisory Action

Last November, ESMA identified the topic of costs and performance for retail investment products as one of its Union Strategic Supervisory Priorities for national competent authorities (NCAs).

As part of its work in this area, on 6 January 2021, ESMA announced the launch of a Common Supervisory Action (CSA) on the supervision of costs and fees of UCITS across the EU. 

The CSA will be conducted during the course of 2021, together with the NCAs of the 27 EU Member States and will take into account ESMA's Supervisory Briefing on the supervision of costs, published in June 2020.

The aim of the CSA is to assess

• how far authorised firms comply with the relevant cost-related provisions in the UCITS framework and the obligation not to impose charge undue costs to investors; and
• whether firms which use Efficient Portfolio Management (EPM) techniques adhere to the requirements set out in the UCITS framework and in the relevant ESMA Guidelines.

A common methodology developed by ESMA will be used for this work and, throughout 2021, NCAs will share their knowledge and experiences through ESMA in order to ensure supervisory convergence in how they supervise cost-related issues.

We will be keeping an eye on the progress made under the CSA and will report on any significant developments in due course.