Consumer rights campaigner slams IMA fees stance

Gina Miller, co-founder of the True and Fair Campaign, has backed the Pensions Institute by calling into question the approach taken by the Investment Management Association in making fund charges clear to investors.

Yesterday (27 May), the Pensions Institute at Cass Business School said proposals put forward by the IMA to make sure investors understand charges will not “cover every penny spent by a fund”.

In response to the Pensions Institute criticism, Daniel Godfrey, chief executive of the IMA, said the recommendation for his organisation’s members to use the ongoing fund charge rather than the annual management charge was only the first stage of improving transparency.

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He said the OCF was “forward looking, uses a standardised methodology and provides the best indicator of the charges a consumer will pay for the fund.”

Mr Godfrey said: “We would encourage the entire market, including the media, to refer to the OCF.

“The second stage has been the pounds and pence per unit disclosure of all costs paid by a fund, including all direct transaction costs, in the context of performance.

“The third stage is to look further at how to account for indirect costs, and also to reach a consistent basis for the calculation and disclosure of portfolio turnover rates so that clients can better understand the relevant investment processes.

“The fourth stage is an ongoing review of existing disclosure codes to ensure that specific, costed disclosure is made to clients of the split in dealing commissions between execution and research.

“These three stages are all based on historic accountability (ie. looking backwards to explain costs incurred).”

However, Gina Miller, co-founder of the True & Fair Campaign said trying to eradicate the deceit of hidden charges in several stages, as the IMA suggests, would take years to implement, and millions of unsuspecting savers will continue suffer.

She said: “The IMA must act immediately to stop the abuse of people’s hard earned money and must interrogate and audit existing proposals and bring in total fee transparency by the end of this year.

“Implementing total fee transparency is not rocket science. There is no excuse for any further delay.”