The North American Securities Administrators Association (NASAA) is calling for improved fee disclosure in a report, which found a disparity in how U.S. brokers disclose their fees, and dubious charging practices.

NASAA released a report Thursday setting out the results of a survey of brokers’ fee disclosure practices that it carried out in the wake of enforcement actions brought by regulators in Connecticut concerning inappropriate fees charged by brokers.

The Investment Products and Services Project Group within NASAA’s Broker-Dealer Section conducted the survey, which found vast differences in disclosure methods, with fee explanations ranging from a single paragraph to seven pages of detail. Initial fee disclosures lack uniformity in terms of the method of disclosure, the terminology used, and the location of the disclosure, it says.

The report notes that, while brokers may be complying with the technical requirements governing fee disclosures, these disclosures lose their effectiveness when they are hidden in small print, embedded in lengthy account opening documents, or varied in terminology that does not define the service provided.

“Fees hidden within pages of impenetrable verbiage is not meaningful fee disclosure,” says Andrea Seidt, president of NASAA and Ohio Securities Commissioner. “Investors should be able to easily compare and contrast fees among the various broker-dealers in order to make an informed investment decision.”

The survey also uncovered “questionable” markups on certain fees charged to investors, it says; with markups on transfer fees ranging from 100% to 280% above the wholesale cost. Some firms also charge huge markups for other services. For example, it notes that one firm charges clients $500 to receive securities in certificate form, versus the broker’s cost of $60. The report stresses that excessive fees may constitute violations of state laws and regulatory rules.

“The report raises concerns regarding the transparency and reasonableness of broker-dealer fee practices,” Seidt says.

Based on the survey’s findings, the report recommends that NASAA work with the Financial Industry Regulatory Authority (FINRA) and the industry to develop a model fee disclosure that is simple to read, easily accessible, and can be used effectively by investors to understand and compare fees. To that end, it recommends that NASAA establish a task force to work with industry in standardizing the language, placement, and structure of fee disclosures similar to the approach taken in the banking industry.

The report also recommends greater investor education to help investors find and understand the fees they are being charged. And, it calls for regulators to review the issues raised regarding disclosure and fee markups.

“State regulators will be examining these issues more closely, but welcome the opportunity to work with industry to ensure that fees are reasonable and fairly disclosed to investors,” says Seidt.