Thirty global money managers have failed to disclose fee information to investors in line with U.K. Financial Conduct Authority-endorsed standards, research by ClearGlass Analytics shows.
The FCA agreed the standards with investors and money managers in 2018.
Fee transparency analytics firm ClearGlass collected and examined 9,000 templates of fee based on Cost Transparency Initiative templates, on behalf of 500 investors that had requested the service. These investors had £700 billion ($957.6 billion) in assets as of Dec. 31, 2020.
Based on the data collected in the past two years, templates supplied by 242 managers were approved as meeting the standards, while a further 131 managers were unclassified because only a small number of investors requested the information. The remaining 30 managers failed to meet the standards.
"I reached a point (at which) we need to let people know who the good ones and the bad ones (are)," Christopher Sier, executive chairman at ClearGlass, said in a telephone interview, adding that these managers have failed because they did not deliver the data in the time period required by their investors or delivered the data in an incorrect format.
Some money managers were found to be submitting information in line with requirements under other rules rather than the more complex demands of the FCA-endorsed, CTI standards.
One finding was that managers calculated client-specific costs at the manager level, rather than including costs for third-party providers such as custodians or collateral managers.
Mr. Sier confirmed that some asset owners chose to terminate managers based on the outcome of the disclosure study. He declined to name the investors or managers terminated.
A source at one of the managers named in the report said that the firm provided the information in an unacceptable format for two clients but they were rectifying the issue. The source added that a deadline set by the investor was also missed and they were implementing new processes to meet the new standards in 2021.
A number of managers reported issues with meeting the requirements of the format of the template but said they were also rectifying the issues.
A Columbia Threadneedle Investments spokesman said: "Client reporting is an important part of service to clients. Last year we introduced a new reporting process for ClearGlass clients and most received the information requested. However, as it was a new process it took additional time to deliver the requests to deadline at the outset. We're confident we now have a robust process to meet ClearGlass' requirements going forward."
A BlackRock spokesman said in a separate comment: "BlackRock's clients receive all the required disclosures to help them make informed decisions on the value of their investments. In this instance, as discussed in advance with ClearGlass, the format of our disclosure did not meet their required criteria to achieve a ClearPass. Over the course of 2021 we will work with ClearGlass to deliver our disclosure in the format required."
Other managers disagreed with the assessment.
A spokesman for Aegon U.K. said: "Costs and charges information is provided to clients, however differences in methodology meant the data doesn't fit the format ClearGlass requested."
An Insight spokesman said: "We do not accept the assessment from ClearGlass and are extremely disappointed that they have ignored the fact that our reporting on fees and performance fulfills regulatory obligations and is fully in line with the Cost Transparency Initiative's standards and guidance from the PLSA and Investment Association."
"Despite fulfilling our regulatory obligations and providing the highest quality of reporting, ClearGlass has insisted that we provide reports which go beyond these standards," the Insight spokesman said.
"We engaged directly with ClearGlass on this issue prior to publication of the study and we will consider their recommendations where practical and continue to discuss their ideas with them on an ongoing basis," the Insight spokesman added.
A spokesman for Alcentra said: "Transparency with our clients is of the utmost importance — Alcentra has provided cost transparency data in the CTI templates directly to our end clients when requested. We do not currently provide data via third-parties with the exception of Byhiras which is the platform required by the local government pension scheme code of transparency. We are working internally on how to best satisfy ClearGlass requirements, and in the meantime continue to provide the data directly to our clients."
Mr. Sier said said managers can get onto the "pass" list every three months, since the list will be updated once a quarter.
"The only thing that will hold back a manager (is) if they don't have to give us the data (because none of the investors have requested it). The big ones will almost 100% give us the data because now they are aware of the problem and they will sort it out," he added.
Ashmore, Credit Suisse Asset Management, Coatue and EQT declined to comment. Other managers could not immediately be reached for comment.