The funds industry is imposing 18.5 billion pounds of hidden costs on investors every year through dealing charges that are obscured by cryptic fee structures and convoluted language, new research on financial consumers has found.

The report was published on Tuesday by a prominent investor who is launching a campaign to impose a standardised code for disclosure of fees on a financial industry that he says has lost sight of whose money they are investing.

Alan Miller, former fund manager at New Star and co-founder of wealth manager SCM, said the new standard would guarantee transparency and do away with the multiplicity of hidden fees, lack of product transparency and... convoluted language.

SCM's research found dealing costs amount to 2.7 billion pounds per year for UK retail funds and 18.5 billion pounds for the entire British savings and investment industry.

Rather than the consumer having to navigate the minefield of industry practices... the onus should be on the industry to act in an ethical manner and be honest with customers, Miller said in a statement.

The campaign echoes calls earlier this week from Fidelity for an industry standard on investment charges and greater transparency.

The high cost of investing has come under the spotlight as market volatility and the financial crisis has slashed returns on investments.

Fund charges are never more important for investors than in a low return environment, so even if the campaign only raises awareness of the issues then it can have a positive effect, Ed Moisson, head of UK research at fund analysis firm Lipper told Reuters.

But Britain's fund industry association, the IMA, challenged accusations of hidden charges, arguing all costs are available in fund literature provided by investment managers.

People need to save for the long term. They do not need to be scared off by false stories that if they do so they will be ripped off by the industry, said Richard Saunders, IMA Chief Executive.

(Reporting by Chris Vellacott; Editing by Jodie Ginsberg)