Chris Hitchen’s plea to the FCA on transparency.

It’s good that the PLSA have published the speeches at its investment conference on youtube. Here is a debate started by a speech from Tracey McDermott of the FCA that generates some really useful discussion  on “where the market is failing pension funds”.

Chris Hitchen of RPMI gets going at around minute 32 and after a couple of minutes of waffle he gets down to some straight talking at minute 35.

I admire Chris for being honest , rigorous and for making a genuine difference. His remarks on the “deep dig” into fund management costs to reduce the cost of intermediation are very welcome.

He’s reported in AI-CIO remarking that what the market needs is not the kind of pinpoint liquidity that helps high frequency traders in their jobs but a fairer system which allows long term investors (such as pensions) to know what they are paying for and whether they get value for money for the costs they incur.

“It seems [daily liquidity] suits a part of the investment chain—market makers, dealers, high-frequency traders—to persuade me that they’re doing me a favor when they’re effectively charging my members for price discovery, -. we don’t need price discovery.”

Hitchen calls on the FCA for a better system which allows long term investors (such as pensions) to know what they are paying for and whether they get value for money for the costs they incur.

These issues are being raised not just by large institutional investors like RPMI , but by individual investors (like me and many like me).

So it is timely that Chris completes his comments by turning back to Tracey McDermott to ask her for help. Whether you are the CIO of a mega fund, sit on the board of an ICC or an occupational pension scheme or are a member or policyholder, you need to know what value for money looks like and whether you are getting it.

Thanks Chris for saying what you did at the PLSA conference. I was with you in spirit (though not in person). The PLSA can- I hope – extend coverage next year to the audience questions which are missed from the end of the broadcast.

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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3 Responses to Chris Hitchen’s plea to the FCA on transparency.

  1. George Kirrin says:

    Sorry, Henry, but if I am a member of one of these large “institutional” schemes I wouldn’t be impressed that my pensions administrators, well-paid “agents” no doubt, didn’t know the costs of our fund management by a factor of three or four times.

    It also sounds to me as if the scheme accounts of those large “institutional” schemes are failing to give members a true and fair view, which surely should be including the total costs of all of the material “contracts”, entered into on members’ behalves and, one would hope, in members’ best interests.

    It doesn’t sound like it.

    • George Kirrin says:

      Watching that clip again, Mr Hitchen admits around 38 minutes 30 that actual management costs were four times what they thought they were.

      He talks of “contracts” and participating in at least two industry reviews over the last decade, but if I were a railway pensioner I would not be happy. Those contracts would be signed off by Mr Hitchen and his colleagues.

  2. henry tapper says:

    yes, his candour endeared him to me. He has gone on to join Mark Fawcett and the IA Advisory Board, signing a non-disclosure agreement that even covers the TOR. From the correspondence with him that has been shared, he considers that the IA are more likely to hear the truth from fund managers if the truth is subsequently buried. This may be true, but it rather defeats the point of the Board!

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