MiFID II guide
MiFID II costs and charges disclosure
MiFID II requires firms to show clients every cost of a service and product, before and after they invest, as cash amounts and percentages. Here is what to disclose, when, and in what form.
MiFID II requires investment firms to tell clients, in good time, about all costs and associated charges of their investment services and of the financial instruments they recommend or sell. The costs must be aggregated so the client can see the total cost and its cumulative effect on return. The obligation is in Article 24(4) of MiFID II, and the detail is in Article 50 and Annex II of Delegated Regulation (EU) 2017/565.
What must be disclosed
Article 24(4) covers costs relating to both the investment and ancillary services and the financial instruments. That includes the cost of advice where relevant, the cost of the instrument recommended or marketed, how the client may pay for it, and any third-party payments.
All costs and charges not caused by underlying market risk must be aggregated. The client must be able to understand the overall cost and the cumulative effect on the return of the investment. An itemised breakdown must be provided on request.
The cost categories
Annex II of the Delegated Regulation sets out the categories firms must cover:
| Category | Service costs (examples) | Product costs (examples) |
|---|---|---|
| One-off charges | Deposit or set-up fees, termination fees | Entry and exit charges |
| Ongoing charges | Management, advisory and custody fees | Fund management fees, ongoing product charges |
| Transaction costs | Broker commissions, transaction taxes, FX costs | Transaction costs inside the fund or product |
| Ancillary services | Research costs, custody costs not covered above | |
| Incidental costs | Performance fees | Performance fees |
Ex-ante: before the service
Before providing the service, the firm must give the client an estimate of costs and charges. Article 50 requires that:
- costs are aggregated and expressed both as a cash amount and as a percentage;
- an illustration shows the cumulative effect of costs on return. It must show the effect of overall costs over the expected holding period, any anticipated spikes or fluctuations in costs, and an accompanying description;
- where the firm recommends or markets an instrument, product costs are taken from the manufacturer’s information, such as the PRIIPs key information document.
Distance transactions
If the client agrees the transaction by distance communication that prevents prior delivery, the firm may provide the costs information without undue delay afterwards. The client must consent, the firm must have offered the option of delaying the transaction to receive the information first, and the firm must offer to give the information over the phone before the transaction.
Ex-post: after the service
Where there is an ongoing relationship with the client, firms must provide at least annually a personalised report of the costs and charges actually incurred during the period. It must cover both service and product costs, aggregated as a cash amount and a percentage, and include the illustration of the cumulative effect on return. Many firms combine it with their periodic statements.
The 2022 Quick Fix
Directive (EU) 2021/338, the “Quick Fix”, applied from 28 February 2022 and eased some cost obligations:
- For professional clients, the detailed cost disclosure rules no longer apply to services other than investment advice and portfolio management.
- Electronic format became the default for client information. Retail clients can still ask for paper.
Looking ahead: the Retail Investment Strategy
The EU’s Retail Investment Strategy is expected to change cost disclosures further, introducing value-for-money benchmarks and more standardised cost presentation. A political agreement was reached in December 2025, and formal adoption is expected around the end of 2026. Member states will then have time to transpose the new rules. Until they apply, the current MiFID II requirements remain in force.
Costs and charges checklist
- Ex-ante estimates cover both service and product costs, in every Annex II category
- Totals are shown as cash amounts and percentages, with an itemised breakdown on request
- An illustration shows the cumulative effect of costs on return
- Product cost data is sourced from manufacturers (EMT or KID) and kept current
- Inducements are disclosed and itemised separately
- Ex-post reports are sent at least annually and reconcile to actual costs
- Every disclosure is archived with the data it was generated from
How Tervan handles costs and charges
Tervan generates ex-ante cost disclosures from your product and fee data, using the same template engine as the statement of suitability. Each disclosure is a PDF/A, archived with a hash and linked to the advice it belongs to in the audit trail.
Frequently asked questions
What is the difference between ex-ante and ex-post cost disclosure?
Ex-ante disclosure is given before the service is provided and is based on estimated costs. Ex-post disclosure is given afterwards, at least annually where there is an ongoing relationship, and is based on the costs actually incurred.
Do costs have to be shown as a percentage or a cash amount?
Both. Costs and charges must be aggregated and expressed as a cash amount and as a percentage, and an itemised breakdown must be provided if the client asks for one.
Do the cost disclosure rules apply to professional clients?
Since the 2021 Quick Fix amendments, the detailed cost disclosure rules no longer apply to services for professional clients other than investment advice and portfolio management. For advice and portfolio management to professional clients, they still apply.
Where do firms get product cost data?
Usually from product manufacturers through the European MiFID Template (EMT), an industry standard maintained by FinDatEx, alongside PRIIPs key information documents.
This guide is general information about EU rules, not legal advice. National implementation and your regulator's guidance can add requirements. Check the primary sources linked above before relying on it.