By Ciara Davies

On 6 January 2021, ESMA published a press release announcing it is launching a common supervisory action (CSA) with national competent authorities (NCAs) on the supervision of costs and fees of UCITS.

The CSA will be conducted during 2021, with the aim of assessing the compliance of supervised entities with the relevant cost-related provisions in the UCITS framework and the obligation of not charging investors with undue costs. The NCAs will take into account the supervisory briefing on the supervision of costs published by ESMA in June 2020.

The CSA will also cover entities employing Efficient Portfolio Management (EPM) techniques to assess whether they adhere to the requirements set out in the UCITS framework and ESMA Guidelines on ETFs and other UCITS issues.

The press release states that ensuring greater convergence of costs is an integral part of ESMA’s broader efforts on the costs of retail investment products and is key to improving investors’ confidence in financial markets and costs associated with obtaining financial products.