(65)Directives 2011/61/EU and 2009/65/EC require AIFMs and UCITS management companies to act with due skill, care and diligence in the best interests of the investment funds they manage and of their investors. Member States should therefore require AIFMs and UCITS management companies to act honestly and fairly as regards the fees and costs charged to investors. In 2020, ESMA developed a supervisory briefing to promote convergence on the supervision of costs in AIFs and UCITS and to develop a set of criteria to support competent authorities in assessing the notion of undue costs and in supervising the obligation to prevent undue costs from being charged to investors. Those criteria are intended to provide guidance to competent authorities, while promoting supervisory convergence in the context of the capital markets union. However, due to the lack of a clear definition of undue costs, at present, divergent market and supervisory practices exist as to what industry and supervisors perceive as undue costs, and evidence has shown a disparity in the costs charged in different Member States and in the costs charged to retail investors as compared to professional investors. The proposed amendments to Directives 2011/61/EU and 2009/65/EC, in the context of the Union’s retail investment strategy, intend to tackle that issue, by requiring fund managers to establish a sound pricing process, which should comprise the identification, analysis and review of costs charged, directly or indirectly, to investment funds or their unit-holders, and by introducing a requirement to compensate investors where undue costs have been charged. ESMA should submit a report to the European Parliament, the Council and the Commission assessing the level of, reasons for, and differences in, the costs charged to retail investors, including differences resulting from the nature of the AIFs and UCITS concerned, and analysing whether the criteria set out in its supervisory briefing are to be complemented with regard to the notion of undue costs. In order to support the competent authorities in the supervision of costs, and ESMA in its analysis of cost-related issues, the competent authorities should collect cost data to be shared with ESMA on a one-time basis. That data collection would increase ESMA’s expertise in the area of cost reporting with a view to providing the European Parliament, the Council, the Commission and the competent authorities with technical advice on the collection of cost data in the context of the Union’s retail investment strategy. On the basis of that report, ESMA should carry out activities under Article 29 of Regulation (EU) No 1095/2010 to help develop a common understanding of the notion of undue costs.