A Financial Conduct Authority (FCA) working group has made five recommendations regarding the consistent and standardised disclosure of costs and charges to investors.
The institutional disclosure working group’s (IDWG) recommendations published today, 5 July, has proposed the use of five templates which would allow investors to see “key data” more easily, however suggests that the templates should not be made mandatory.
The IDWG, led by Chris Sier, was set up to give institutional investors a clearer understanding of the costs and charges for a given fund or mandate and have been meeting on a monthly basis since September 2017.
Responding to the recommendations, the FCA said: “We welcome the recommendations made by the IDWG. We believe that the group has made significant progress in tackling the issues we found in relation to institutional disclosure as part of the asset management market study.
“We will now work with interested parties to begin the process of supporting these recommendations. We will continue to work with investor and industry representatives as well as other regulators with an interest in this space.”
IDWG also suggested that a new group should be created by autumn this year, in order to “curate and update” the framework. The FCA said it will be forming the new group over the summer.
Furthermore, IDWG recommended that education of investors on cost disclosure must be improved.
Aon head of performance and cost transparency, Neil Smith, said: “We believe the imminent launch of these cost templates is another positive step in allowing institutional investors a clearer assessment of the value generated by their asset managers.
“As the use of the templates is voluntary we believe investment advisers, such as Aon, have a big role to play in ensuring their initial and continued success and particularly how advisers respond to non-compliant asset managers.”
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