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FCA working group recommends five voluntary cost disclosure templates

FCA working group head Chris Sier

The group tasked with increasing investment cost transparency has released its recommendations, including suggesting five fee disclosure templates.

The institutional disclosure working group, led by transparency champion Chris Sier, was created by the FCA last September following the package of remedies outlined in the FCA’s  final report into the asset management industry.

The group published a summary of its recommendations today, which include a proposal that five templates be used and that these should be voluntary.

The recommended templates are:

  • A main “account-level” template that has data from providers in one place. That template is fed into by three sub-templates.
  • A private equity sub-template.
  • A physical assets sub-template.
  • A custody sub-template.
  • A user template that summarises the data from the account-level template.

The group has also recommended a new body should be set up by autumn 2018 to update the framework. The working group has recommended the first review should be no later than one year after the new group is established.

The group recommends no FCA rule should be brought in that makes the submission of data mandatory by providers, or makes the collection of data from providers by institutional investors mandatory.

The group’s recommendations say: “The FCA should consider writing rules if: there is poor adoption of the templates by institutional investors or their providers; or institutional investors report difficulties in obtaining cost data to the level proposed in the templates from their providers; or providers are found to have misrepresented data via the templates to clients.”

FCA strategy and competition director Christopher Woolard says the regulator will now work with investors and providers to bring in the group’s recommendations.

Woolard says: “We are working with interested bodies and anticipate the new group will be formed over the summer with launch planned for autumn. The full IDWG report, including the templates, will be released once the new group has been convened.”

He says: “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.”

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