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European regulators should take urgent action to stop the distribution of misleading claims about investment funds sold across the whole of the EU, according to an influential trade body.

The European Fund and Asset Management Association (Efama) which represents members overseeing €23tn in assets said on Thursday that investors were receiving data about fund costs and performance that were confusing and misleading following the introduction of new disclosure rules in January. Asset managers across Europe have to disclose more details about costs and charges that eat into investors’ returns under new regulations that were introduced In January.

Dozens of asset managers, however, have claimed that they expected to incur zero or even negative transaction costs when buying or selling securities as they adjust investment portfolios. European regulators view these results as “teething problems” that will be resolved as more data becomes available. Efama, however, insisted that the methodology approved by regulators for calculating transaction costs was flawed, leading to asset managers providing misleading information to investors “It is essential that these issues are fixed as soon as possible to avoid further consumer detriment,” said Peter De Proft, the director general of Efama.

He added that the “clock was ticking” and that swift action was needed by the European Commission and regulators well in advance of the formal review which is not due to begin until December 2018. “There is no time to wait. The European Commission and European Supervisory Authorities (ESAs) have an important role to play in avoiding confusion among investors and to prevent damage to the [investment fund] sector as managers adapt to the new regime,” said Mr De Proft.

Providers of so called Priips — packaged retail and insurance-based investment products — are required under the new rules to outline a range of returns that an investment might deliver in different market conditions, instead of historic performance data. Efama complained that Priips forward looking scenarios were entirely based on the strong performance of markets over the past five years, resulting in overly optimistic projections for how these investments might perform in the future.

The UK financial regulator said this month that it had begun a review into disclosure standards following the widespread criticisms of the new Priips costs and performance data. Andrew Bailey, the chief executive of the Financial Conduct Authority, admitted this month that the introduction of the new rules had “not gone as we hoped it would and as we wanted it to.” The FCA had already said in January that it would allow investment managers to provide additional “explanatory materials” following the publication of misleadingly optimistic performance projections by some product providers. Mr De Proft said the provision of such additinal guidance was “not strictly in line” with the European regulations and furthermore that it was “questionable whether most retail investors will pay due attention to these warnings”.

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