The FCA’s new rules on pension charges disclosure are great news for savers and ask big questions about the future of the Investment Association says Transparency Task Force founder Andy Agathangelou
Today’s announcement of new rules to require asset managers to deliver information on charges in a standardised form is a significant step by the Financial Conduct Authority. It reflects the problems independent governance committees (IGCs) have had in getting accurate information from asset managers, which have been so significant that the failure rate for IGCs to date has been 100 per cent. Not one of them was able to do what they were supposed to, which is report on the costs being taken out of the funds being run on behalf of their customers. So this step by the regulator is a recognition that something needed to change.
It makes it the responsibility for asset managers to report in a standardised fashion and it also says if IGCs and trustees do not get the information, they are expected to mention it in their report. No asset manager wants to be mentioned in that way, so this should be a real threat.
This announcement is also significant because it is indicative of what we can expect from the FCA’s interim report on its asset management market study. Hopefully we can take from the tone of what has just come out that this market study will be similarly pro-consumer. This consultation indicates the direction of travel, and is a response to all of the hard work that people fighting for greater transparency have been engaged in.
But for me the bigger story is what happens as a consequence of these changes. Not all asset managers are the same. Some see this step towards greater transparency as positive and will want to meet the new requirements and differentiate themselves from the others by doing so in a thorough and timely way. Some others will see it as a threat. I genuinely wonder whether we will see the share price of some asset managers who have enjoyed significant profits under the old regime hit by these new requirements.
It is also conceivable that we could see a schism start to appear within the Investment Association as a result of this announcement. How will they be able to build consensus when competing when different bodies within the organisation have such different agendas. Will we see someone with the mindset of Daniel Godfrey responding to calls from progressive asset management to come and create a new body to push the cause of a new world? The big question is where does the enlightened end of the asset management industry perceive their future to lie? Within the Investment Association?