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Regulation

FCA working group looking to have investment fee standards draft ready in April

The institutional disclosure working group of the U.K.'s Financial Conduct Authority is creating a set of disclosure standards for transparency in investment fees paid by institutional investors and would like to have a substantial draft to release by April, the effort's chairman said at the Pension and Lifetime Saving Association's annual investment conference in Edinburgh on Wednesday.

Chris Sier, chairman of the disclosure group, said during a panel discussion that the group is working on something that institutional investors can ultimately use as a binary test for evaluating all vendors, to determine if they are providing good value for the fees they earn.

"We want to put in place a binary filter to sort out the good and the bad," Mr. Sier said. If any vendors can't or won't provide the data points that the working group's disclosure standard seeks, "you probably don't want to work with them," he said.

The group intends for the market and investors to benefit from the increased transparency and standardized disclosure of costs to institutional investors. Next steps will involve further refining the proposal for a template in the light of the feedback they receive. The agreed template will help firms present costs and charges in a consistent and standard way, the group said in a news release Wednesday.

The working group is collecting input on the kinds of fees that should be tracked and currently has a list of more than 400, Mr. Sier said.

The group was set up to support consistent disclosure of costs to institutional investors following the Financial Conduct Authority asset management market study published in 2017. The initiative's objective is to gain agreement on disclosure templates for services provided to institutional investors.