The FCA panel setting a template for fund charge disclosure has agreed how it will decide what the format should be, Money Marketing has learned.
Money Marketing understands the FCA will publish the terms of reference for its disclosure working group later this week, which will set out the scope of the work behind the template and how to enforce its standards.
An analysis of the cost drivers behind a wide-range of the underlying asset classes of funds including lifestyle funds and investment trusts, will be its first priority.
For each area– initially equities, fixed income, private equity, and foreign exchange – there will be an individual working group defining a series of costs such as trading and market access costs.
These groups will be made of specialist fund managers and other selected experts.
The disclosure panel is an independent group set up by the FCA in September following the package of remedies outlined in the regulator’s final report into the asset management industry.
The group, chaired by outspoken professor Chris Sier, has been asked to come up with a standard template for a more transparent disclosure of costs and charges that asset managers will be asked to adhere to by the end of the 2017.
This will build on Sier’s longstanding work with the Local Government Pension Scheme as well as the templates created by Investment Association and others, held its first meeting on 7 September.
As another priority, the working group will look into research costs, with a focus on the costs paid by brokers’ commissions rather than the costs fund managers internalise in their accounts.
The FCA working group will then look at ways of enforcing the data collection on asset managers.
A source close to the group says one of the ways to do this will be engaging with independent data organisations such as Morningstar, Reuters and Bloomberg to act as data checkers and collectors, instead of relying on pension consultants or the FCA itself.
This is intended to avoid any conflict of interests from consultants and to speed up the process.
However, the role of pension consultants remain fundamental to the ultimate goal of the working group which is to make sure all asset managers adopt the template standards without the need specific intervention of the regulator.
Another theme of the working group will be to determine the data the funds should be collecting for different types of investments. This includes finding the ways to summarise the data to make it relevant for different investors types.
It is understood the scope of the working group will subsequently extend to hedge funds and derivative analysis, as well as infrastructure and property. Initially, the FCA said it will look into disclosure for private equity and hedge funds managers in 2018.