Good (and bad) news on investment fee disclosure!


The FT reports that the Investment Association has stated

“we can see a way to build an underlying system, a common template, that will provide data tailored in a way that is suitable to both retail and institutional investors”

That’s the good news, the bad news is that it is going to launch a consultation on its draft disclosure code for pension fund charges towards the end of 2016.

Meanwhile the Independent Governance Committees will be delivering their first report on the value we are getting for the money we pay for our pension fund management. Presumably this will be finger in the air stuff as , by its own admission, the IA will not be sharing the data in a consistent way.

Well I always thought that where there was a will, there was a way. I also think that where there is a way, then people should go and tread it. Daniel Godfrey , who was ousted for trying to walk that line, is right to point out that this is only an adoption of a project he initiated in 2014. The public has every right to side with Godfrey in asking why , when the way is now in sight, we have to wait till some time in 2017 before anyone gets on with doing the work.

We are not talking trifling numbers. Here is Godfrey from another FT report last week

 “The Financial Conduct Authority reckoned £1.5bn of investors’ money — over and above charges that savers had agreed to pay to investment managers — was spent on investment research in this way by UK investment managers in 2012 alone. Yet where is this expenditure disclosed to investors? Nowhere.”

I hear that the Pensions Regulator is hoping to hold the insurer’s feet to the fire on IGC compliance. But if I read the Investment Association’s statement to the FT right, there is simply no way that IGCs can tell us whether we are getting value for money, when there is no proper reporting on the funds into which our money is invested.

If the IGCs are going to be more than box-tickers for the insurance company’s compliance departments, they need real data by which they can compare what their members are paying for goods and services.

The FCA and tPR need to ask the Investment Association what the point is of consulting with the people who are going to use this information when we already have the order. In April 2015 the FCA issued a request for information from all and sundry as to what was needed by way of fund disclosure. They also published a paper by Novarca which went so far as to deliver a common template of the type the Investment Association are now envisaging.

It’s tempting to suppose that  the Investment Association’s simply kicking the can another two years down the road. The majority of its membership -as the True and Fair Campaign has shown, are charging investors through hidden charges up to three times the stated annual management charge.

This might suit their membership well enough, but it ill suits the consumer who has been promised action on this for some time. Lest we are in any doubt , there is no such thing as an institutional consumer, consumers are real people who pay hidden costs whether in institutional fund classes or retail fund classes.

The DWP are due to deliver the second part of their charges cap legislation in 2017, the bit that closes the loophole that stops workplace pensions shoving all their costs into additional fund expenses (hidden costs and charges) that don’t get counted in the 0.75% charge cap.

Most of the abuses of the cap that are happening today are coming about precisely because there is no common template from the IA on fee disclosure. If the IA are given another year’s grace to consult, then the DWP’s timetable will be set back and workplace pensions will continue to be prey to any number of fund scams.

So not only can the IGCs not do their job because of the IA’s filibustering, but neither can the DWP. The consumer is being held to ransom by an opaque consortium of insurers and fund managers who seem to have no accountability for their actions either to the FCA, tPR of the DWP. They appear to be a law unto themselves.

Rather than messing around at the fringes of the problem, Government should make their way to Holborn asap and have a strong word with Jonathan Lipkin and its new CEO.

If the IA can see a way to build a system to disclose fees, then they should build a system to disclose fees. Almost everyone outside the IA believes that system could and should be built and no-one wants any further consultation.

Andy Agethangelou , Ralph Frank and all at the Transparency Task Force, the door is ajar, do not miss this opportunity.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Good (and bad) news on investment fee disclosure!

  1. Phil Castle says:

    Once again Henry I agree. There is absolutely NO excuse now for further delay. Change NOW or loose the advisory sectors business as so many of us now use cheaper passives in a core and satellite approach. We will ONLY let oir clients pay extra for true active fund management and are wise to hidden dealing costs now. The wind changed at RDR, change your sails or sink IA.

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