The Investment Association (IA) has “welcomed” an interim report on the Financial Conduct Authority’s (FCA) long-awaited study of the UK asset management industry but said it will have to wait and see whether the FCA’s proposals will ultimately benefit consumers.
Chris Cummings, chief executive at the IA, welcomed “the spirit” behind the FCA’s market study and took pains to highlight his association’s ongoing efforts to improve confidence in the asset management industry.
“The FCA’s analysis and recommendations come at a time when the industry is already taking significant steps to improve investor confidence,” he said.
“Among new measures the IA has put forward is a detailed plan for a new model of charge and cost disclosure, which is acknowledged in the interim report and has been welcomed by all parties.”
He said the IA would now take a close look at the FCA’s proposals in other areas – including the independent oversight of investment funds – to make certain the authority’s final recommendations “mean customers will be ultimately better served”.
On proposals to introduce an “independence element” on fund-oversight committees, Cummings pointed out that UK savers and investors already benefited from “a significant body” of regulation that “embeds consumer protection in fund-governance mechanisms”.
He said the IA would work closely with the FCA to make sure its proposed models for enhancing oversight passed the “crucial test” of actually improving customer outcomes.
On the FCA’s recommendation to introduce an “all-in fee” for funds, Cummings said both organisations had been “long united” in their support for the Ongoing Charges Figure, rather than Annual Management Charge, while on proposals to improve transparency, he praised the regulator for acknowledging the work the industry had already done on costs and charges in recent years.
“Overall,” Cummings said, “we welcome measures to improve customers’ outcomes, and we will consider the range of transparency measures proposed and how effective they might be at delivering on that goal.”
In August, the IA published a controversial report in which it hit back against claims of high hidden fees charged by fund managers, equating their existence with that of the mythical Loch Ness monster.
The IA said that, while it took allegations of hidden fees seriously, those claiming the use of such fees had yet to prove their existence conclusively.
BrightonRock’s Con Keating described the IA’s report as being “offensively bad”, while the Transparency Task Force, in a rebuttal, described a lack of fee disclosure as a “festering sore”.
Even NEST CIO Mark Fawcett, chair of the IA’s independent advisory board on cost disclosure, declined to endorse the report, noting that the board had not been consulted on its contents prior to publication.
In September, the IA moved to “press the reset button”, with association chair Helena Morrissey conceding that the report had “inadvertently but understandably upset people”.