Pilot for cost transparency template launches

Pilot for cost transparency template launches

An independent industry group has launched an initiative to implement the use of cost transparency templates across the pension and investment landscape.

Launched today (7 November), the Cost Transparency Initiative (CTI) comes on the back of a report carried out by the Financial Conduct Authority’s independent Institutional Disclosure Working Group. 

The initiative, chaired by the Universities Superannuation Scheme’s pensions strategy executive Mel Duffield, will take this work further and run a pilot with a number of pension schemes and asset managers to test the templates before rolling them out industry-wide on a voluntary basis. 

The CTI is supported by the PLSA, the Investment Association and the Local Government Pension Scheme Advisory Board.

Julian Mund, chief executive of the PLSA, hailed the initiative a "step forward for cost transparency where both schemes and providers benefit from one common, standardised way of assessing and providing costs."

Ms Duffield, said: "It hasn’t always been possible for trustees to compare costs between different services because of a lack of clarity and consistency.

"By introducing a robust way to define and measure the full cost of investing, we have a golden opportunity to make a real difference across the institutional investment market."

The FCA's working group was launched on the back of its Asset Management Market Study as part of its remedies package.

The FCA said it wanted to see more consistent and standardised disclosure of costs and charges to institutional investors and thought a standardised disclosure template should provide a clearer understanding of the costs and charges for a given fund or mandate.

This in turn should allow investors to compare charges between providers and give them a clear expectation of the disclosure they can expect, it said.

It had appointed Chris Sier to chair the working group with a view to agreeing a template. 

Christopher Woolard, executive director of strategy and competition at the FCA welcomed the launch and confirmed that the templates drafted by the FCA's working group had been passed on. 

He said: "The FCA has been asked to join the cost transparency initiative as an observer and we look forward to our continuing involvement in this area."

The Pensions Regulator has also pledged its support. It said the initiative would "enable trustees to scrutinise and challenge costs, and to assist them with ensuring that their members have a clear understanding of the costs they face".

Over the coming months, the CTI will look to make further appointments. Duffield added: "We are looking to have an excellent mix of experience and skills in the new group which will ensure we are well placed to deliver this important piece of work."

Andrew Pennie, head of pathways at Intelligent Pensions said: "It’s great to see a drive for increasing transparency of asset management costs and charges. Anything that helps trustees to evaluate and compare asset management costs for the benefit of their members has to be a positive development.