Investment managers may soon be in the sights of the regulator after a damning report this week warned that investors have no idea what charges they pay.

The research for the Financial Services Consumer Panel (FSCP) said buyers of £2,400 billion of retail funds, whether through Isas, pensions, insurance products, or directly, were being bamboozled by an industry pursuing "profit maximisation combined with incomplete disclosure and poor management of conflicts of interest".

The panel, which advises the Financial Conduct Authority, suggests that investment ­managers be required to quote a single comprehensive charge, enabling consumers to compare charges and forcing firms to be more efficient.

It said the headline annual management charge "may be as little as a quarter of the true costs, as many of the charges are deducted directly from the fund and remain hidden". Yet charges were proven to have "a significant impact on returns".

It warned performance statistics could be manipulated by managers, with old failing funds made to merge and disappear.

The panel said: "Investment managers could also have a strengthened legal obligation to put the interests of their customers first, the fiduciary duty.

"The current regulatory requirement to 'treat customers fairly' does not tackle the multiple conflicts of interest in the investment industry."

FSCP chair Sue Lewis said: "The problems our research has identified are long-standing, and need fixing urgently.

"People are depending more and more on investment to deliver their long-term financial well-being, especially in the light of the recent pension reforms. It is completely unacceptable that consumers do not know what firms are charging them to manage money on their behalf, and cannot compare different offers. While we recognise that the industry is working to improve disclosure, this does not go far enough."

The research found that it was impossible to know from fund literature what costs were borne by the saver and that the industry was "economical with the truth" in its disclosures. It found a lack of competition on price and cost, and that 'the price of similar products varies very significantly, perhaps by as much as four or five fold, for near identical services'. There had been "little progress" since the industry's failings were identified in the Sandler Report of 2002, while in May this year the FCA had castigated firms for too frequently providing information on fund charges that was unclear, insufficiently comprehensive and misleading.

Daniel Godfrey, chief executive of the Investment Management Association, said: "Although cost disclosure by UK funds is already very detailed and comprehensive, it also needs to be understandable. This is not a simple task and success has eluded both regulators and the industry for many years.

"But the IMA has now developed a new measure that tells consumers, in pounds and pence, exactly how much a unit in a fund grew over the course of a year and how much it cost to achieve that performance. Every penny spent by the fund is included in this figure and so it provides a simple, accessible, all-inclusive measure of all costs. Nothing is hidden and nothing left out."

However Gina Miller of the True and Fair Campaign, said the IMA was "pretending to offer consumers a transparent, complete and understandable disclosure of their costs when they offer none of these". She added: "It is a simple task, to add a few numbers up and present the total in an understandable format."

Ms Miller said the single charge proposed by the panel would be "a huge leap forward for consumers' basic right to know how much they are paying."

She added if hidden charges could treble the cost of investing, "the conclusion must be that the UK industry is secretly hiving off billions of pounds from the British public every single year - this is the only industry in which fraud is legal".