The Investment Association (IA) has rejected a call for it to take down the controversial ‘Loch Ness Monster’ report from its website, despite its chief executive telling a BBC documentary the wording used in it was ‘regrettable’.
The row over the IA’s release – Hidden fund fees, the Loch Ness Monster of Investments? – has been reignited following IA chief executive Chris Cummings’ admission in the BBC Radio 4 In Business programme ‘The Transparency Detectives’ , aired last week, that the language used was ‘regrettable’ and amidst claims of emotional blackmail and bullying from high-profile campaigner Gina Miller.
Asked whether the Loch Ness press release was correct or not, and whether critics of the industry were wrong, IA chief executive Chris Cummings said: “That press release was based on a serious piece of work that was done, but the language was regrettable. That decision was taken before I arrived so there is nothing I can do to change that.”
But the IA has refused a call from Transparency Task Force co-founder Andy Agathangelou to remove the release from its website.
In the programme Miller described how her public statements on hidden charges led to her being called a ‘black widow spider’, and caused her to be vilified by industry figures for threatening the wellbeing of their families.
Agathangelou says: “In August 2016, referencing a research report that was widely criticised, and which I believe they commissioned themselves, the Investment Association stated in a press release ‘The report finds zero evidence that funds’ returns are affected by hidden fees lurking within, suggesting that ‘hidden fund fees’ may in reality be the ‘Loch Ness Monster of investments’.
“Back then, I asked the Investment Association to apologise to campaigners for their offensive press release on more than one occasion. They considered doing so but to my surprise they chose not to. I wasn’t impressed with their misleading and offensive press release and I was even less impressed by their unwillingness to act courteously and apologise for the offence caused.”
Miller told the programme: “Those of us in the industry who have been campaigning for this have been sidelined, have been attacked, have even earned a nickname in the industry of the ‘black widow spider’ because I am bringing down the industry all by myself. A group of men at a summer party came up to me and said ‘you should be ashamed of yourself. What you are doing is going to hurt my family’. And I thought not only you are you bullying me but you are also subjecting me to emotional blackmail as well as bullying – that’s a great combination.”
Former IA CEO Daniel Godfrey, who now runs The People’s Trust, voiced concerns that preoccupation with Brexit could weaken Government’s resolve to solve transparency problems. He told the programme: “Brexit has provided a reason for industries, not just asset management, to say this is not a good time to attack us at home when you are abroad defending us and I think that reduces some of the pressure from greater regulatory and political scrutiny.”
FCA executive director of strategy and competition Chris Woolard told the programme that an announcement on the FCA’s work with other stakeholders on charge transparency is imminent. He said that while the code was likely to be voluntary, competitive pressure would increase demand for those investment managers that adopted the code. He said: “We have seen in the US where some of this has happened, money is drawn to those that act honestly. I think the alignment of incentives given the spotlight that has been thrown on this area is now actually quite close. We think people are working effectively towards a good outcome here.”
The Investment Association is now working with the FCA, Treasury and consumer groups to agree standard guidelines for charge transparency disclosure.
An IA spokesperson says: “The Investment Association is now under new leadership and is wholly focused on delivering on the issues that consumers and our industry care about, such as providing full transparency on costs and charges. A successful example of our work in this area to date includes developing a new cost disclosure template with the Local Government Pension Scheme Advisory Board as part its Code of Transparency, which was successfully implemented last year.
“We are also working closely and productively with transparency campaigner Chris Sier as part of his role as chair of the FCA independent working group, to design a new template on cost disclosure which will be rolled out later this year. The group has made excellent progress on this initiative so far and the results will be consulted upon soon.”