Client Servicing, Reporting and Digital Channels
What this domain tests
The exam tests how firms deliver statements, performance, costs and ESG information to clients through portals, APIs and mobile channels, and the regulatory standards that govern those disclosures - MiFID II costs and charges, PRIIPs, SFDR, GIPS and the UK Consumer Duty.
Core rules and concepts
- Reporting content: holdings, transactions, valuation, performance, attribution, costs and charges, risk indicators, ESG characteristics and regulatory disclosures.
- Performance: time-weighted return removes the effect of cash flows and is standard for reporting; money-weighted return reflects the investor's actual experience. Gross versus net matters and must be labelled.
- MiFID II costs and charges: disclose ex-ante and ex-post costs, including ongoing charges, transaction costs, incidental costs and implicit spread costs, shown as a percentage and as cash, plus the cumulative effect on return.
- PRIIPs KID: standardised risk, performance and cost disclosure for packaged retail products.
- SFDR: entity- and product-level sustainability disclosures, with principal adverse impacts and periodic reporting.
- GIPS: voluntary global standard for performance presentation; firms claiming compliance must meet the standards, and verification is recommended rather than mandatory.
- Digital channels: client portals, APIs, CRM, e-delivery, e-signature, accessibility and personalisation. Personalisation must respect data privacy and Consumer Duty outcomes.
Worked example
A portfolio of £100,000 has ongoing charges of 0.75%, transaction costs of 0.15%, incidental costs of 0.05% and implicit spread costs of 0.10%. Reasoning: aggregate cost = 1.05%, or £1,050 on £100,000. The disclosure should show each component, the total as a percentage and cash amount, and the cumulative effect over the holding period. Implicit costs are easy to omit but are required. Separately, if the portfolio returned 7.0% gross and costs were 1.05%, the net figure is 5.95% - never present the gross number as the client's return.
Traps that cost marks
Quoting gross performance as net; mixing time-weighted and money-weighted returns; disclosing only explicit charges; claiming GIPS compliance without meeting every requirement; publishing ESG metrics without methodology or source; ignoring Consumer Duty foreseeable-harm analysis in digital journeys.