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Fund managers branded ‘arrogant and complacent’ on fees

FCA working group head Chris Sier

Asset managers have been branded “arrogant and complacent” by the academic tasked with creating a new template for fund costs and charges.

Transparency campaigner Chris Sier, who is chairing the regulator’s disclosure working group, has told The Times that he estimates £35bn a year is being overcharged from pension funds in hidden costs.

On those managers who had pushed back against reform proposals, Sier said: “The FCA has found you wanting. You’re not doing yourselves any favours by resisting this.”

The comment echoes those made by Sier to Money Marketing last month, that the asset managers complaining the most “have the most to worry about”.

He said: “The market has realised this is happening regardless, the template is going to happen.”

Sier, who is a professor at Newcastle University Business School, was appointed by the FCA in August. He is scheduled to agree a template for disclosure of costs and charges by the end of the year, and has previously hit out at practices including the continued failure of some firms to disclose the industry-standard ongoing charges figure in fund factsheets.

His review will mainly focus on institutional investors.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Before fund managers are condemned out of hand, perhaps some examination of the costs they incur in order to (one hopes) provide profitable products. Research, IT, Marketing and all the rest. Then of course there are the salaries. It is hardly appropriate to pay fund managers the minimum wage. They need to be incentivised and the best ones need to be attracted – much as footballers. (Indeed perhaps Prof. Sier would like to investigate the cost of Premiership football tickets – perhaps if footballers were paid less….)

    Anyway cost taken out of context with value is meaningless. It isn’t only how much they make when conditions are favorable, but how little the lose when things go pear shaped.

    Sure there should be examination of excessive fees and yes, there needs to be full transparency.But here the market might well be a better controller. This constant pressure may well end up killing the goose to the detriment of us all.

  2. Having read some of Mr Sier’s work in the past he’s spot on.
    Where fund managers have no excuse is charging v high ‘admin’ fees to funds (e.g. M&G, Jupiter, Fidelity etc) and not reducing their % AMC on larger funds – no attempt to pass on economies of scale to investors. It’s a gravy train that requires regulatory intervention and sustained consumer pressure to change –
    both in short supply so far…

  3. In their defence, Harry, ‘overpaid’ footballers have fought in a pool of hundreds of thousands, even millions of people from across the globe to reach the top of their game. They train hard, make sacrifices, demonstrate huge talent, provide tension, entertainment and are constantly under threat from that career ending injury. And when performance stops? So does their contract.

    Meanwhile, over in fund management…

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