DISC 6.2 Calculation of costs and charges information

All costs and charges categorised in accordance with DISC 6.1.2R must be calculated by a manufacturer:

1. (1) using the applicable assumed investment amount;
2. (2) for the preceding 12-month period; and
3. (3) on a gross basis, such that the costs and charges calculation takes account of all relevant taxes including, but not limited to, any stamp duty or similar tax.

DISC 6.2.1R(2) is modified:

1. (1) in the case of transaction costs, which must be calculated in accordance with the requirements in DISC 6.5;
2. (2) where DISC 6.2.4R or DISC 6.2.6R applies;
3. (3) in respect of costs or charges for the subsequent 12-month period which are fixed or otherwise known in advance, in which case, a manufacturer must use those costs and charges; and
4. (4) where a consumer composite investment has a maturity of under 12-months, in which case, a manufacturer must calculate the costs and charges over the life of the product.

In relation to a consumer composite investment priced or denominated in a currency other than pounds sterling, the costs and charges must be calculated in pounds sterling and accompanied by a statement of the exchange rate used to calculate them.

1. (1) This rule applies where a manufacturer identifies that the costs and charges information under DISC 6.1.1R requires adjustment in order to comply with its obligations in DISC 2A.1.4R or DISC 3.1.2R because the manufacturer expects, on reasonable grounds, that future costs and charges will be materially different from those calculated for the preceding 12-month period.
2. (2) Where (1) applies, the manufacturer may adjust the calculation of the costs and charges associated with the investment in a consumer composite investment as reasonably necessary to ensure the costs and charges information is not misleading and otherwise complies with DISC 2A.1.4R and DISC 3.1.2R.

An example of a future cost or charge being materially different for the purposes of DISC 6.2.4R(1) is where the manufacturer is aware that the amount of any fee payable to a management company, depositary or custodian will change from what was charged during the preceding 12-month period.

1. (1) This rule applies in relation to a consumer composite investment which has been operating for less than 12 months, and for which some or all costs and charges for a full 12-month period are not yet known.
2. (2) When calculating costs and charges in the circumstances described in (1), the manufacturer must estimate the costs and charges for a 12-month period based on:
   1. (a) the costs or charges set in agreements relating to the consumer composite investment;
   2. (b) the level of costs and charges already incurred, if any; or
   3. (c) where costs and charges are not set in agreements or none have yet been incurred, on its reasonable expectation of the amount of those costs and charges.
3. (3) The requirement in (2) does not apply in respect of transaction costs, which must be calculated in accordance with DISC 6.5.2R.
4. (4) The manufacturer must keep the accuracy of any costs and charges figure calculated under (2) or (3) under review and must, in carrying out the review in DISC 3.2.2R, update and replace any costs and charges information based on the calculation in (2) or (3) with costs and charges information calculated in accordance with DISC 6.2.1R and DISC 6.2.2R.

When estimating costs and charges in accordance with DISC 6.2.6R(2), a manufacturer may base its estimates on the costs and charges associated with an investment in a reasonably comparable consumer composite investment.

Where the manufacturer of an insurance-based investment product pays retail investors a share of its profits, the manufacturer may calculate its ongoing costs and transaction costs net of that profit share.