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Unit Trusts (Management Changes)

Volume 961: debated on Tuesday 30 January 1979

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asked the Secretary of State for Trade when he expects to lay before Parliament the Price Commission report on unit trust management charges.

The Price Commission has completed the inquiry which I announced in reply to the hon. Member's question of 28 July 1978. The resulting report is being published today and I have arranged for copies to be placed in the Vote Office and in the Library.The Price Commission formed the view that there is no case for changing the charges levied on unit trusts at this time. It concludes that if maximum charges are to continue to be regulated by the Department of Trade there is no case for changing the present formula which

"appears to represent the best available compromise between the various objectives which any formula must aim to achieve".

It also raises the question whether regulation should be dropped, with a view to achieving greater flexibility and competition. The commission recommends a strengthening of the arrangements for informing prospective purchasers of the charges to be made. It believes that the unit holders' interests are best served if trustee and audit fees continue to be paid from the management companies' income, as this encourages strict control of such fees.

The Department is discussing these conclusions with the Unit Trust Association and would be glad to receive any comments on the report from other interested persons or organisations within the next month. These should be sent to Branch 1B, Companies Division, Department of Trade, Sanctuary Buildings, 16–20 Great Smith Street, London SWIP 3DB. In the light of the report and of the comments received during this period, my right hon. Friend will then reach his conclusions and announce his proposals.

I am grateful to the Price Commission and to all those who co-operated in the inquiry.