The Financial Conduct Authority (FCA) has proposed the introduction of a duty on asset managers to disclose aggregate transaction costs to pension schemes that invest in their funds.
In a new set of rules aimed at standardising the disclosure of transaction costs incurred by pension investments, the FCA also suggested asset managers should provide a breakdown of transaction costs on request.
It said the breakdown should be separated into categories of identifiable costs, which could include specific charges like taxes and securities lending fees.
The FCA said the proposed new rules - open for consultation until 4 January 2017 - will deliver a high degree of consistency in how transaction costs are reported, and will give governance bodies confidence information presented to them contains a comprehensive assessment of fees.
Currently, independent governance committees (IGCs) and trustees are required to request and report on transactions costs as far as they are able, but asset managers are not required to provide full disclosure of these charges in a standardised form.
Christopher Woolard (pictured), executive director of strategy and competition at the FCA said: "IGCs are already seeking to make pension schemes work better for their members. The proposals we are announcing today will allow IGCs to see fully the transaction costs that their funds pay and enable them to make better decisions about how they get value for money for their members.
"To ensure consistency across the market, the FCA also proposes that the calculation uses a methodology for evaluating transaction costs, called the slippage cost. This compares the price at which a transaction was actually executed with the price when the order to transact entered the market. The time an order enters the market should be captured by an order management system and this time can then be used to identify the price of the asset.
"Firms who are unable to provide transaction cost information for all of the assets in a scheme will have to disclose this clearly to the governance body with an explanation of why it has not been possible to provide the information."
The Pensions Regulator (TPR) has substantially increased the usage of its powers against trustees – posting a sharp rise in the use of formal information gathering powers and High Court production orders during the three months to the end of September....
The Pension Schemes Bill has completed its third reading, crossing its latest hurdle in the House of Commons.
An amendment to the Pensions Schemes Bill which would have seen people given a pre-booked Pension Wise appointment ahead of accessing their retirement savings has been defeated.
A proposal to ensure savers receive a Pension Wise appointment prior to accessing their retirement pot has received cross-party support in parliament, while Labour seeks net-zero pensions by 2050.
Pension scams are not just about the money lost, but the lives devastated, says Nicola Parish, so the industry must unite to defeat this scourge.