Clients have the right to know how much they pay, to whom, and how it affects their return. We set up your firm’s costs and charges process so that every figure adds up: ex ante, annual ex post and itemized breakdown on request.
Do your cost figures match what the client receives?
Tell us which services you provide and how you disclose costs today: we find the gaps in your process before a complaint does.
Six areas we review at banks, investment firms (ESI), financial advisory firms (EAF) and management companies so that cost transparency is a process, not an act of faith.
We review end to end how your firm calculates, aggregates and discloses costs and charges: data sources, ex ante simulators, the illustration of the cumulative effect, the annual ex post statement and the breakdown on request. With a prioritized remediation plan.
The third-party payments you retain must be shown to the client, itemized separately. We reconcile your retrocession agreements with what your templates disclose, to eliminate the invisible inducement.
Execution and trading venue costs are part of the analysis: transparency and best execution are reviewed together.
The scope of the information can be adjusted for professional clients and eligible counterparties on the terms set by the rules. For retail clients, it cannot.
The costs in the PRIIPs KID and those in your MiFID disclosures must tell the same story. We coordinate both layers.
In discretionary portfolio management, the annual ex post statement is the moment of truth: fees, product costs and turnover, aggregated per client.
Four typical firms with the same symptom (figures that do not match across systems, templates and contracts) and a different point of failure.
“We generate the annual cost statement in bulk, and nobody checks that it reaches every client or that the product data is complete. A well-aimed complaint would put us in a difficult position.”
“We disclose our fees properly, but the product costs and the retrocessions on the share classes we use do not always appear in the aggregate. We want to close that gap before the CNMV sees it.”
“Our ex ante simulator shows the purchase fee, but not the product’s ongoing costs or the cumulative effect over several years. We need to rebuild it on a legal basis, not just a design one.”
“The banks that sell our funds ask us for consistent, timely cost data. If our data arrives wrong, the error is multiplied across thousands of communications to end clients.”
Almost all supervisory cases and complaints about costs fit one of these three patterns. They are avoidable and, if caught in time, cheap to fix.
Incomplete ex ante simulators: tools that show the visible fee but leave out product costs, ongoing costs or the illustration of the cumulative effect on return. The client decides on the basis of a cropped picture, and your evidence is flawed from the start.
The ex post statement that never arrives: annual statements that are not generated for all clients, that sit unannounced in digital mailboxes nobody opens, or that show aggregates which do not make clear what was paid. The obligation is annual and per client, not statistical.
Hidden inducements: retrocessions received from third parties that are not itemized in the cost disclosure. This is the finding that turns a routine review into a credibility problem with the supervisor and with the client.
| Stage | What you must disclose | Evidence you must keep |
|---|---|---|
| Ex ante (before the service or transaction) | Aggregated costs of the service and the product, inducements included, with the illustration of the cumulative effect of costs on the expected return. | Simulations or documents provided, with date and content, linked to the client and to the specific transaction. |
| Ex post (annual) | Actual costs and charges incurred during the year, aggregated and personalized for each client, including retained third-party payments and their effect on return. | Annual statement generated and made available to each client, with a record of issue, channel and reproducible content. |
| On request from the client | Item-by-item breakdown of what the aggregate summarizes: service costs, product costs, inducements and payments to third parties. | Log of requests and responses, with reasonable response times and traceability of the breakdown provided. |
We audit your data sources, simulators, templates and annual statements; we reconcile inducements with breakdowns; and we leave the process documented, with owners and controls. So that the next CNMV review or the next complaint finds a closed, well-documented file.
Article 24(4) of MiFID II, supplemented by Article 50 of Delegated Regulation (EU) 2017/565, requires firms to inform clients of all associated costs and charges: those of the investment service, those of the instrument and third-party payments. The information is presented in aggregated form at two points in time (ex ante and annually ex post), with an itemized breakdown on request from the client and an illustration of the cumulative effect of costs on return.
An aggregated, understandable view of what the client will pay if they sign up: service costs (commissions, fees, custody), product costs (including those embedded in the instrument) and any inducements the firm retains. It must be provided sufficiently in advance for the decision to be an informed one.
The usual failure is not total omission but partial omission: simulators that show the transaction fee and say nothing about the product’s ongoing costs or the effect over several years.
A representation (numerical or graphical) of how total costs reduce the return on the investment over time, so that the client sees the real impact and not just an isolated annual percentage.
It is the most overlooked element in digital developments and one of the first things a reviewer spots: if your simulator or your ex post statement does not include it clearly, the process is incomplete.
Yes. The third-party payments your firm retains must be shown to the client, itemized separately within the cost disclosure. An inducement permitted under MiFID II Art. 24 but invisible in your templates is no longer defensible.
The acid test is reconciliation: what your agreements with manufacturers say must match what your clients see. The full regime is covered in MiFID II retrocessions and inducements.
Annually and personalized for each client, covering the actual costs and charges incurred in the period, where the relationship requires it under the rules (notably where there is an ongoing relationship). Generating it is not enough: you must actually make it available and be able to prove that you did.
The risk patterns: groups of clients mistakenly left out of bulk processes, digital mailboxes with no notification, and statements that make it impossible to reconstruct what was charged.
The rules allow certain requirements to be applied in a more limited way to professional clients and eligible counterparties, on the terms and within the limits they set; for retail clients, the standard applies in full.
Before relying on any limitation, review your client classification and document the agreements: a wrongly assigned category turns the “limitation” into a breach toward retail clients.
They are separate layers whose data must be consistent: the KID describes the costs of the packaged product; the MiFID disclosure aggregates product, service and inducements for the specific transaction or relationship.
When the figures in the two do not match (because the data sources are different or out of date), the client receives two different truths, and that fuels both complaints and requests for information.
Cost complaints tend to succeed when the firm cannot reconstruct what was disclosed, when and with what content. Your defense is the record: ex ante simulations linked to the transaction, ex post statements issued and breakdown requests answered.
If the matter escalates, the client can turn to the CNMV complaints service, whose reports are not binding but carry interpretive weight. Reaching that stage with your file in order changes the outcome.
Cost transparency is, above all, a problem of data and of process ownership. This is the route we follow to get it working.
We catalog every item the client bears (service, product, third parties) and the system each data point comes from. Most errors start here: duplicated sources, empty fields and products with no ongoing cost data.
We design the ex ante documents (simulator, pre-contractual document), the annual ex post statement and the breakdown on request, with the cumulative effect on return and visible inducements. And we set when and through which channel each one is delivered.
Periodic reconciliations between contracts, systems and communications; an ex post coverage control (no client left out); and a reproducible archive of everything delivered. The process ends up with an owner, a calendar and metrics.
This process is one of the areas we review in our MiFID II compliance service; if your question is what can be received from third parties, start with retrocessions and inducements.
The 10 conduct controls the CNMV expects to see working at an EAF or investment firm, with the typical evidence for each one. Ideal as a quarterly self-assessment with your team.
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Nine concepts that structure Art. 50 of Delegated Regulation 2017/565 and that should be fine-tuned in your templates and procedures.
Information prior to the service or transaction: aggregated service and product costs, inducements included, so the client can decide with data.
Personalized annual statement of the actual costs and charges borne by the client during the period.
All costs added together and shown as an amount and a percentage, so the client sees the whole picture without digging through line items.
The client’s right to ask for an itemized breakdown of the aggregate: service, product, third parties and inducements.
Illustration of how total costs reduce the return on the investment over time.
Fees and commissions for advising, managing, executing or holding in custody, including ancillary charges linked to the transactions.
Costs built into the product (management, transaction, structuring) that the client bears even if they do not see them on the account statement.
Third-party payments retained by the firm, itemized separately in the cost information given to the client.
The option to adjust certain requirements for non-retail clients on the terms set by the rules; for retail clients, the full standard applies.
Aggregated service and product costs, inducements included, delivered before the decision and tailored to the service provided.
Versioned templates and simulations, a delivery log by client and transaction, and legal validation of the content.
Impact of costs on return shown clearly in the ex ante and ex post documents.
Documented calculation methodology and real examples of the illustrations delivered.
Personalized annual issue, with the actual costs for the period, full coverage of the client base and effective delivery.
Coverage controls, logs of issue and availability, and reproducible samples of the statements sent.
Third-party payments itemized separately for the client and reconciled with contracts and accounting records.
Periodic reconciliation of agreements, systems and templates, and minutes of the review of differences and their correction.
A streamlined procedure for itemized detail and a reproducible archive of everything disclosed during the relationship.
Log of requests with response times, the breakdowns delivered and a repository retrievable by client.
Five quick checks: if you fail any of them, the process needs a review before a third party forces one.
Cost disclosure is the entry point for many complaints and reviews: it is verifiable, it is comparable and it leaves a trail. These pages cover the issues that usually open up next.
How the complaints service works, what weight its reports carry and how to prepare the firm’s response.
The European negotiations point to product cost as the central metric. Firms with clean data will have the advantage.
Zero commissions with revenue from other sources: why low-cost models require more transparency, not less.
Fees and how they are calculated are agreed in writing; the cost disclosure must reflect that agreement exactly.
Follow the thread with retrocessions and inducements, best execution of orders and MiFID client classification. And for the full set of conduct rules, our MiFID II compliance service.
Tell us how you produce your cost disclosures today (simulators, statements, ex post) and we will audit the entire process against MiFID II Art. 24(4) and Art. 50 of Delegated Regulation 2017/565.
If there is one MiFID II obligation that clients can check for themselves, it is this one. Article 24(4) of Directive 2014/65/EU and Article 50 of Delegated Regulation (EU) 2017/565 require firms to disclose all costs and charges associated with the service and the instrument (third-party inducements included), in aggregated form, at two points in time (ex ante and annually ex post), with an itemized breakdown on request and an illustration of the cumulative effect of costs on return. On paper it is simple; in practice it is a problem of data, systems and process ownership that few firms have truly solved.
Before the service or transaction, the client must receive the total aggregated cost: what the firm charges for the service, what is embedded in the product and what the firm retains from third parties. In digital channels, this obligation lives in the simulators, and that is where the typical error lies: showing the purchase fee and leaving out the product’s ongoing costs or the effect over several years. An incomplete ex ante disclosure is not a cosmetic defect: it is an investment decision made with partial information, which is exactly what the rule seeks to prevent.
Once a year, the firm reports the costs and charges actually incurred, personalized for each client and aggregated, with their effect on return. The recurring failures are operational: groups of clients left out of the bulk process, statements deposited in mailboxes nobody checks, and incomplete product data that distorts the total. In discretionary portfolio management, where the client delegates, this annual statement is the main window of control the client has left: the supervisor knows this and looks at it.
Retained third-party payments must be itemized separately in the cost disclosure, consistent with the MiFID II Art. 24 inducements regime. And any client can demand an item-by-item breakdown of the aggregate. The robustness test for the process is twofold: reconciliation between agreements with manufacturers and client templates, and the ability to answer a breakdown request within a reasonable time without heroic reconstructions. Consistency with the other layers (the PRIIPs KID, the contract, execution costs) completes the picture.
Poorly disclosed costs feed two fronts at once: client complaints (with the CNMV complaints service as the usual arena) and supervisory reviews that ask the firm to reconstruct what was disclosed and when. Our work with banks, investment firms, EAFs and management companies: an audit of the full process (sources, templates, simulators, ex post, breakdown), inducement reconciliation, a remediation plan and an evidentiary archive, as part of our MiFID II compliance service and tailored to each client’s category.
Key legislation, linked to the official text:
Legislation and links reviewed in .