LONDON Oct 5 Asset managers in Britain will
have a duty to disclose all transaction costs to workplace
pension schemes that invest in their funds under the latest
proposals by the financial regulator to improve transparency in
a market with opaque fees.
Calling for responses to a consultation document by Jan. 4,
2017, the Financial Conduct Authority (FCA) said on Wednesday
the planned rule changes would allow trustees and governance
committees of defined contribution workplace pensions to
properly assess if schemes provide value for money to members.
The FCA wants asset managers to break down transaction costs
on request into identifiable categories, which could include
taxes and securities lending costs, and compare the price at
which a transaction was executed with the price when the order
was received, the so-called slippage cost.
"The time an order enters the market should be captured by
an order management system and this time can then be used to
identify the price of the asset," the FCA said.
Pension providers and the asset management industry welcomed
the proposals, saying transparency was crucial to ensure the
confidence of clients and savers.
"Our goal here is consistent and complete reporting for all
client groups, implementing both UK and EU regulatory change,"
said Jonathan Lipkin, director of public policy at the
Investment Association, the trade body for UK investment
The FCA consultation follows a March 2015 joint announcement
with the government's Department for Work and Pensions to
explore how information about transaction costs in occupational
and workplace personal pension schemes can be better reported
The FCA said firms unable to provide transaction cost
information for all of the assets in a scheme will have to
disclose this clearly to the governance body with an explanation
of why it has not been possible to provide it.
Opaque charges such as transaction costs can be small
individually. But when added to other layers in a chain of
costs, they can become more material, campaigners for cost
transparency have said.
(Reporting by Kirstin Ridley; editing by Mark Heinrich)