IN THE WORLD of fund management active versus passive has been an ongoing debate for some time now.

On one side are active managers who claim to be so skilled in picking stocks that their funds will always beat the market. On the other are passive managers who believe the chances of beating the market are so slim that they simply hold every company in it.

The differentiator between the two? Cost, with the former generally charging significantly higher management fees in exchange for their expertise.

The problem, as highlighted by the Financial Conduct Authority last year, is that many active managers do not perform enough to justify their inflated fees. Worse still, some are so vague about what their fund is supposed to do and which benchmark it is trying to beat that measuring their performance can be a minefield.

It is no wonder, then, that the watchdog indicated that it was going to require fund managers to be more transparent by applying single, all-in fees while also providing investors with tools to help them identify underperformance.

Against this backdrop the reforms the FCA has now proposed seem to fall short of its original, highly critical stance. Although it has now committed to “support the disclosure of a single, all-in fee to investors”, with asset management charges, transaction costs and intermediary fees all included, the FCA has given no indication of how this should be presented, with further consultation expected on that and several other areas further down the line.

Given the lobbying opportunity that still more consultation will offer the fully funded and highly motivated funds industry, though, it does not look like investors are going to benefit from the reforms any time soon.

The FCA may appear to have taken a pro-consumer stance, but until actual changes are made investors will not be any better off.