Some money managers operating in the U.K. have been called out for not complying with cost disclosure industry standards, but sources argue a big part of the problem is that investors and managers can differ on what's sufficient disclosure and how it's presented.
Cost templates created by an investor and manager group known as the Cost Transparency Initiative aim at helping U.K. investors determine "hidden" non-management fees that money managers charge as part of overall costs. They also help to determine transaction costs.
Since the introduction of the templates in 2018, retirement plans have been requesting information on manager costs via companies that collect this information.
In January, one of these firms, ClearGlass Ltd., published a list of 30 managers that it said had failed to provide sufficient information on costs to their investors.
A firm could fail the assessment, ClearGlass said, because it delivered the requested cost data late, provided it in a format other than the official CTI template or provided too little information on fee breakdowns.
Among the 30 managers were Insight Investment Management Ltd. and BlackRock Inc. But these managers refuted ClearGlass' assessment, saying that firms that gather the cost disclosure initiative's templates on behalf of investors asked for additional details on fees and costs beyond what is required by the CTI.
"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," an Insight spokesman said in an email, adding that the firm's disclosure was fully in line with the Cost Transparency Initiative's standards and guidance from the Pensions and Lifetime Savings Association, which was involved in its development.
"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 added.
A BlackRock spokesman said in a separate emailed comment that its clients receive all the required disclosures to help them make informed decisions on the value of their investments. In templates collected by ClearGlass for BlackRock's clients the format of the firm's disclosure did not meet what was required, he said.
While the managers argued that they supplied information in line with regulatory requirements, both managers said they are working with the ClearGlass to deliver the information in the template that investors requested.
Also, some private markets managers disagreed with their assessment. One of these managers, who didn't want to be named, said that ClearGlass' results were a "surprise" and were considered "unfair."
The manager, which was one of the 30 managers shamed by ClearGlass in January, said the firm works very closely with its investors and is transparent about all the information that LPs expect to receive.
Christopher Sier, executive chairman at ClearGlass, said that managers have failed because they did not deliver the data in the time period required by their investors or delivered the data in a format in line with requirements under other rules rather than the more complex demands of the U.K. Financial Conduct Authority-endorsed, CTI standards.