WASHINGTON – Congress is prepared to take a fine-tooth comb to the mutual fund business to determine whether investors are getting a fair shake.

That was the message resonating from Capitol Hill Wednesday as members of the House Committee on Financial Services convened to hear testimony from seven industry leaders in a heated four-hour session. Among the key issues were the rise in fund fees and expenses, the widespread use (and abuse) of soft-dollar commissions and the role of independent directors.

The panel of lawmakers was led by Richard Baker (R-La.), who opened the hearing by saying "not all is well" in the mutual fund industry, pointing to its "alarming" turnover rate and a troubling "roll ‘em in, roll ‘em out" mentality. Chairman Michael Oxley (R- Ohio), co-author of the groundbreaking Sarbanes-Oxley Act passed earlier this year, spoke about the lack of clarity in the way fees are disclosed and funds’ failure to provide breakpoint discounts promised in prospectuses. "That is simply unacceptable," he said.

Captaining the team of witnesses in favor of further reform in the industry was Jack Bogle, founder of the low-cost Vanguard Group, whose Vanguard 500 index fund has trounced its peers by 76% over the last decade. The seasoned veteran provided statistical evidence that the rise in mutual fund fees over the last 20 years has had an adverse effect on annual performance.

Congress concluded the meeting by saying it will issue a letter to the SEC on soft-dollars and other issues next week.

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