A Financial Conduct Authority (FCA) working group has recommended five institutional cost disclosure templates, although it says these should not be made mandatory.
The Institutional Disclosure Working Group (IDWG), chaired by long-time campaigner Dr Chris Sier, has said its five proposed templates will cover charges associated with most asset classes.
A summary of the group's recommendations was published today (5 July), with the regulator confirming a further body - one of the suggestions - would be established in the autumn to "own the outputs of the work so far" as well as curate and update the templates. It will be required to publish a report within a year of its creation.
The five templates are: a main account-level template covering most product types; a user template summarising the data from the account-level template; and three sub-templates covering private equities, physical assets, and ancillary services or custody.
The FCA said these will be published when the new body is up and running, with appointments expected to be made over the summer.
While the IDWG has not recommended making use of the template compulsory, it has said institutional investors, investment consultants and other market participants should apply pressure on providers. Additionally industry representative organisations and trade bodies, such as the Investment Association (IA), should "be prepared" to adopt the templates as their own disclosure codes and support their members who do use it.
Improved institutional investor education on cost disclosure and its benefits should be provided, the working group said, but the FCA should not introduce any rules to mandate the collection or submission of data from providers. It, however, should consider this if there is poor take-up, difficulties in investors obtaining the information, or if misrepresentation of data is found.
The regulator's director of strategy and competition Christopher Woolard praised the "significant progress" made since the IDWG was formed last September.
"We welcome the recommendations made by the IDWG," he said. "We believe that the group has made significant progress in tackling the issues we found in relation to institutional disclosure as part of the asset management market study.
The FCA will now work with interested parties, other regulators, and investor and industry representatives as it moves ahead with the recommendations, he added.
"As part of the recommendations, the IDWG has encouraged the formation of a group to own the outputs of the work so far and be able to answer questions and monitor the use of the templates. We are working with interested bodies and anticipate the new group will be formed over the summer with launch planned for autumn."
IA director of policy, strategy and research Jonathan Lipkin said: "We welcome the recommendations from the IDWG, in which the IA has been a participant. Transparency is a key foundation for confidence. We look forward to working closely with the FCA, the Pensions and Lifetime Savings Association, institutional customers and other stakeholders to deliver the new framework ."
The group, which has also been jointly deputy chaired by Local Government Association head of pensions Jeff Houston and former shadow pensions minister Gregg McClymont, was created last September in the wake of the FCA's asset management market study.
The £250bn Local Government Pension Scheme has already agreed to adopt the templates upon their publication.
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