UK - Tough guidelines forcing fund managers to disclose more information to pension schemes are unlikely to be in place by next summer's deadline.
Fund management firms are balking at the cost of implementing systems needed to comply with the code, which has been drawn by the Investment Management Association in conjunction with the NAPF.
And they now insist they will not put systems in place until they see client demand for it – something which is not happening at the moment.
A leading fund manager and IMA member said: “Clients have other things on their minds at the moment. The disclosure code is not high on their agenda.”
Baring Asset Management’s head of institutional investment Jenny Segal said that while her own firm had a suitable system in place, many other fund managers would struggle to meet the IMA’s deadline.
She explained that in the current economic climate the last thing a fund manager wanted to do, was increase spending on IT.
NAPF investment director David Gould stressed that pension funds have made it clear that they expect fund managers to pick up the costs associated with code compliance. But managers are reluctant to absorb the costs and criticised the IMA for failing to correctly disclose code implementation costs.
IMA senior advisor Jim Irwin said that any change to fund managers’ set-ups would probably be “substantial”, but admitted that the IMA has no clear idea how much it would cost to make the system changes needed to meet transaction disclosure requirements.
He added: “Most will have to make considerable system changes. Initially firms may have to do the calculations manually.”
The IMA’s 165 members are able to meet the first level of the code – a disclosure of a company’s processes, procedures and policy on transaction costs – but very few members will meet the requirement for a disclosure of hard numbers on a client-specific level, Irwin admitted.
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