Shadow pensions minister Gregg McClymont and the Investment Management Association have clashed over the appropriate level of disclosure on investment charges.
The IMA published guidance on disclosing fund charges in September 2012. It included recommendations to provide three-year averages for transaction costs, such as broker commission and transfer taxes, as a percentage of a fund’s net asset value, and for the disclosure of total costs, not just annual management charges.
Speaking to Money Marketing at the Labour party annual conference, McClymont said: “Decisions on costs and charges cannot be left to trade associations whose members have a potential interest in not declaring all charges.
“While the IMA have adopted a draft disclosure table which contains some steps forward, it still leaves out key cost components.
“This is a case of a trade association being obliged by its members to walk slowly backwards from bad practice rather than seizing the moment to actively pursue the interests of savers.”
McClymont wants charges to be broken down to include the bid offer spread, the transaction costs of underlying funds where a fund invests in another fund, and profits retained, if any, from fund managers from lending stock owned by the pension scheme or from interest earned on cash.
But IMA chief executive Daniel Godfrey says: “The IMA’s proposals for accounting to investors for the costs they have incurred from being in a fund are simple, comprehensive and transparent. They represent a dramatic step forward and avoid repeating the mistakes of the past where attempts to deliver ‘supposed accuracy’ have left consumers with a bewildering calculation that often depends on making heroic assumptions about the future.”