I wasn’t at yesterday’s meeting of The Institutional Working Group but I know a few who were and the feedback I’m getting is good
- A sensible methodology which can be understood
- The platform for a common way for pension funds to find out how much they are paying for asset management
- General agreement among all stakeholders in the room
This is quite an achievement and the recently maligned Chris Sier and the FCA, should be congratulated. CONGRATULATIONS.
What appears to have been said
In the best traditions of British transparency, this is a compilation of whatsapp messages I got from people in the room. If I’ve got the wrong end of the stick, hit me with the other end and I will edit this article. For those of us who have wanted cost transparency for years, the meeting is of great importance. Perhaps the FCA could consider some kind of live-streaming – as the Work and Pensions Select Committee do -so that people like me can get it right first time!
The template that is the first practical output of the Working Group is to follow. It will be a draft of the reporting template. It was not on display yesterday and the meeting was told it would be distributed in the next few days. The IWGs intention is to release a stable template by the middle of the year
TISA asked a question was asked from the floor on whether the template would be consistent with MIFID- an assurance was given it would be.
Alan Miller asked as to how the regulators will deal with those who do not complete the template properly. I have no record of a response.
And it seems from the information that I have, that there was a strong commitment to adopt the template from the LGPS.
The Investment Association , while speaking well of the template , stopped short of a commitment to adopt it. They spoke of “next steps”.
The Investment Association proposed that the focus of the group shift to retail investors so that its output passed “the Daily Mail test” (whatever that is).
Where this gets us
This look like a major step forward- Unison have suggested we use the word “historic”.
The consensus seems to be that the IWG ahs found a balance between the ability of asset managers to supply data and a satisfaction of user’s need to know what they are really paying.
The IWGs has been across all asset classes and the cost templates will be designed with professional usage in mind. The output from the data collection is focussed on getting better consumer outcomes. Those buying on our behalf will have better buying power and this will ultimately bring costs down.
For me the most important agreement of the IWG is the focus on providing buyers with a single number. Though there may be many cost templates, a reference template will provide a common lexicon meaning that when costs are consolidate into the single number, disclosure will be consistent.
This means that we will be able to compare the cost of apples and pears, while recognising they have different value.
In the words of my correspondent the methodology put in place by Chris Sier and his colleagues is “super-solid”. Clearly that contention will be tested over the coming days.
But for now, all is quiet on the charges front. For those who have followed this debate over the last five years, that’s quite a step forward!
Jawing not waring
Henry misquotes UNISON – we said “Is history being made as @TheFCA consults on the cost collection template for pension funds? We are here at the Museum of the Docklands why isn’t it compulsory for fund managers to fill it out? And further to that “No deadline set for the publication for the user template @TheFCA how long will this go on for? We will be consulted forever?”
In the Netherlands and Australia there is a statutory duty to collect and report on pension funds. This is the model we require, Henry’s government refuses to act on behalf of DB members, the DC reporting is limited to Mifid data. So here they rely on ironically the EU. It remains a scandal of historic proportions that asset managers can continue to operate without providing cost data in full.
We are currently exploring with our lawyers the potential breach of the Consumer Protection Act. The FCA has incorporated the campaign for transparency and has slowed it down. The FCA is paid for by the finance sector on a subscription basis and its board is stuffed with members of it.
In our view there needs to be a end date for consultation and completion of the spread sheets and then legislation to compel asset managers to fill them out and then legislation to compel all workplace pension schemes to report. In the mean time UNISON will push through our work in the LGPS to set the benchmark for all others.
We have nothing but admiration for Chris Sier’s work in pulling together the members of the IDWG, everyone knows that Chris has worked closely with us, Jeff Houston and the LGPS Advisory Board to ensure the LGPS funds costs are collected and analysed.
However we remain deeply sceptical that the FCA and its members will deliver and of course we have no faith is this government to deliver for working people. Actions are needed now not in 5 years time.
I think we are on the same page Colin, you either trust Chris or you don’t – clearly we both do. I am frustrated by the timeframes but I don’t think the FCA are holding things up – the IWG is a big beast and it’s taking it longer to deliver than you and I would like. But I’m not hearing alarm bells from the people I respect who were in the room. It would be good to have a more transparent way of delivering news than occurred yesterday (as I say in the blog)!
They’ve already held them up for the LGPS. Let me ask you to respond to this.
1. No end date for consultation.
2. No end date for template release.
3. No compulsion via law to fill it out.
4. No compulsion for DB schemes to report.
5. The establishment will kick this in the long grass.