SCM Direct founding partner Gina Miller has accused big asset management firms of “soft-lobbing” the FCA, as fund groups remain secretive on their responses to the regulator’s interim asset management study.
Miller has been a key campaigner on Brexit, bringing a successful legal challenge to the Government’s plans to trigger Article 50 without a vote by MPs.
The deadline for firms to submit responses to the regulator’s asset management report was 20 February. However, only a few firms including Old Mutual Global Investors, Orbis and Vanguard had publicly shared their views.
They urged the FCA to abandon its “all-in fee” proposal. Vanguard advocated development of “a radically simpler” fees template to replace existing disclosure documents.
Speaking to Money Marketing, Miller says: “For those who published their responses, which are very weak, they’ve actually not answered the questions, they’ve only given big picture comments that serve their own interest more than anything.
“Maybe a lot of the bigger asset managers didn’t want to be transparent because they are again being very conflicted and self-interested so maybe that’s a reason. It’s a form of soft lobbying, they are fighting their corner rather than answering the questions.”
Hargreaves under fire
In SCM Direct’s response to the FCA paper, seen by Money Marketing, the firm has attacked Hargreaves Lansdown for its “poor communication” in providing clear examples on product suitability to clients.
The firm says despite the presence of internal compliance departments, “practices within many of the largest firms are actually the poorest”.
The wealth manager points out at Hargreaves is “proactively marketing” its Portfolio Management Service, but is not offering specific information on charges and other details.
The response says: “As an example of a large firm’ poor communication – Hargreaves recently widely marketed its Portfolio Management Service with a link to its website with no guide to likely charges, save an almost incomprehensible eight page Terms and Conditions document which contained no illustration of actual charges or even attempts to show the level of underlying fund charges for the service offered.
“The main page also shows a performance graph of an ‘example portfolio’ without any detail of what this ‘example portfolio’ might be, does not indicate the name of the specific sector used for comparison and fails to show any individual years’ performance. One has to assume that such an important service must have been ‘signed off’ by internal compliance within Hargreaves.”
SCM Direct’s portfolios on the firm’s website don’t show any specific benchmark.
Hargreaves Lansdown chartered financial planner Danny Cox says: “Hargreaves Lansdown offers excellent value services, acting at the centre of almost 900,000 people’s financial lives. Making the complex easy is at the heart of what we do and our people work with great intelligence and dedication to serve our clients in delivering this aim.”
Competition crunch time
Miller says the FCA is determined to move forward with their work on competition within the asset management industry, although she expects the final report to be pushed back to the Autumn, rather than the Summer when it’s currently due.
She says: “From what I can see the FCA are determined to make these changes but the industry […] and a lot of their responses have come back about how [the FCA proposals] would damage the industry and it is not true. This idea that you’ve got competition because you’ve got lots of providers doesn’t make sense. Competition is not [set by] the number of companies.
“The current political music has changed significantly as before the FCA was under the cosh of George Osborne and the Treasury, and now with May’s government their mood music about shared responsibility and their agenda is very different.
“So [the government] will back up the consumer protection and the FCA acting, so something significant has changed. Also, internally the culture at the FCA itself has changed and I do believe they will forge ahead on this path.”