FCA competiton chief: Gina Miller misunderstands our role

Gina Miller and parts of the press have misinterpreted or misunderstood the FCA’s role in improving charge transparency, a senior figure at the regulator said today.

Speaking at a Transparency Task Force event hosted by IG Group, FCA head of department, competition Robin Finer said that transparency campaigner Miller was wrong to call for a wholesale referral of the asset management industry to the Competition and Markets Authority because the FCA had just as many powers as the CMA.

He also said the media was wrong to interpret the further consultations issued as the FCA going slow on this issue, as it had gone as far as publishing draft rules, but was required by law to publish consultations alongside those draft rules.

Finer argued a CMA referral would not lead to a more rigorous investigation of the issues raised in the asset management market study, or lead to stronger regulatory outcomes. The reason it was consulting on referring investment consultants to the CMA is because they, unlike investment managers, do not fall under FCA regulation, he said.

Asked why these issues were still unresolved when they had first been voiced as early as 2000, Finer said the FCA was only established four and a half years ago, when the regulator first received a duty to oversee competition, and said he thought the progress that had been in 18 months was “not bad”.

But Miller says the regulator – the FCA and its predecessor the FSA – have known about hidden charges for 17 years. She also argues that the Office for Fair Trading recommended mandatory standardised disclosure of all pensions costs and charges over three years ago.

She points to an April 2014 letter from the CMA in response to its True and Fair Campaign that says: “In order to address our concerns, the OFT recommended that the Department for Work and Pensions (DWP) consult on improving the transparency and comparability of information about pension charges – including whether providers could disclose a single Annual Management Charge and investment transaction costs – and quality of schemes in order to make employers’ initial choice of scheme easier.

“In response, DWP published its report Better workplace pensions: Further measures for savers in March 2014, which committed to make standardised disclosure of all pension costs and charges mandatory.”

Finer said: “She (Miller) called for the referring of the whole asset management industry to the CMA. Having worked at both organisations I can safely say that there is nothing the CMA can do that we can’t do when it comes to asset management. It is different for investment consultant because the large component of their activities are not within our regulatory perimeter. The CMA have powers here that we do not have. In asset management we have the power of the sea and I have so there is no point with making such a referral.
“Some of the press reporting has been critical, saying that we hadn’t done enough, but they have misunderstood or misrepresented what we are doing. There was a lot of talk about us simply doing more consulting on the issue, whereas the reality is whenever we make changes to the rules we publish proposals and have to consult. We are now at the stage where the first set of remedies around governance are under consultation, and we are consulting on the rejecting of the undertakings in lieu from consulting firms. There are some things that we do not need to consult on that we are moving forward through recommendations to government. As the rules are contingent on EU regulations where we are awaiting more finality on that before proceeding. It would be odd for us to come out with something in advance of Mifid 2 to that doesn’t sit squarely with it.”

Miller says: “We are pleased to hear from senior FCA staff that their rigorous investigation will be no less tough than any CMA investigation.  However, since the FCA and its predecessor, the FSA have known about hidden charges representing 50 per cent of total costs since the publication of ‘The Price of Retail Investing in the UK’ by Kevin R. James in February 2000, some 17 years ago, we would urge the FCA to speedily implement the necessary remedies on the UK asset management industry for the sake of UK investors.

In reference to the April 2014 CMA letter she adds: “It is July 2017 as we speak – more than three years after this letter was received, and there is still no mandatory standardised disclosure of all pension costs and charges.”