§ Mr. Allen McKayasked the Secretary of State for Trade if he is now in a position to make a statement on the possibility of a Price Commission study of unit trust managers' charges.
§ Mr. Clinton DavisWith the agreement and co-operation of the Unit Trust Association, the Department of Trade has commissioned the Price Commission to carry out an inquiry with the following terms of reference
To study the method of determining profits, and the level of such profits made by management companies from their authorised unit trust activities in recent years; to consider whether the formulae controlling the maximum charges borne by unitholders are appropriate in the light of economic developments during this period; and to suggest ways of modifying these formulae if this seems appropriate.This inquiry, which is in no sense an arbitration between the Department and unit trust managers, is expected to take three months. It will be conducted on an informal basis, and the statutory provisions of the Price Commission Act 1977 under which the Commission examines questions relating to prices and charges will not apply in this case. In formulating its judgment, however, the Commission intends to be guided inter alia by the criteria set out in section 2 of the Price Commission Act 1977. The Commission will report to the Department, which will pay for the cost of the inquiry. The report will be made available to unit trust managers; wider publication will be a matter for the Department, which would however expect to publish it. The report should form a useful basis for resolving a question which has been under discussion for some time.