UK - The government is set to legislate on transaction costs following Paul Myners' attack on fund managers' fees, industry figures believe.
The fear has arisen following the attack made on fund manager fees this month by Myners, author of the government’s report on institutional investment.
Myners claimed trading in equities created no value for schemes and as such branded the £2.5bn spent annually on active fund manager fees as a “tax” on investors.
Gartmore chief operating officer Barry Marshall said: “The impression we have is the government feels the City is dragging its heals on this.
“So when you read Paul Myners speech on institutional investors, it’s pretty heavy hitting… at the very least some very strong guidance will come out of this.”
SEI head of institutional business Patrick Disney said: “All the indications from Ruth Kelly is that the government wants to show it is ‘doing something’.
“So it may be that the cost angle – no matter how that is defined – is what it will focus on.”
Consultants have urged the government not to legislate on fees.Mercer Investment Consulting European partner Neil Walton claims there has been “a lot of progress” made on voluntary compliance with the IMA/NAPF code on fees and believes the government should give the industry more time to show compliance.
He added: “Does the government really want to add another area of potential bureaucracy forcing people to do something mainly for DB schemes, which are already highly regulated?”
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