Over half of asset managers may miss cost disclosure deadlines, finds LCP

This is despite just under three quarters (71%) being confident that, in the future, they will able to provide transaction cost data within eight weeks of each quarter end.

However, asset managers felt the disclosures would be more feasible for June year-end statements, with 56% stating this would be possible, the consultancy revealed in its report.

The findings come from a survey of 20 asset managers and five of the largest DC pension providers, conducted as schemes ramp up for their first transaction cost disclosures.

Since January, asset management firms regulated by the Financial Conduct Authority (FCA) have been obliged to provide transaction costs using the ‘slippage cost methodology' when this is requested by defined contribution (DC) trustees.

Meanwhile, since April, DC schemes must provide additional information in relation to investment charges and core transaction costs to be made available online to members via the annual chair's statement within seven months of the scheme's year-end date.

The same study found that under half (45%) of respondents said they envisage problems in reporting transaction costs for some asset classes in a "timely fashion", particularly with illiquid assets such as property.

Meanwhile, 80% of the surveyed providers said they have internal procedures to check for the reasonableness of the magnitude of reported transaction costs, and 40% said they would remove a manager if they were unable to disclose costs in a reasonable period of time.

LCP partner and head of DC Laura Myers said "further delays" were likely while asset managers get systems in place to meet the new requirements.

"The FCA legislation mandating the calculation of transaction costs has been at short notice, and providers still need to build the internal technology necessary to record the required information," she said. "It is likely there will be further delays until complete disclosure of transaction costs is possible.

"Longer term, the news is more positive, with managers and providers seemingly confident that transaction cost information will be available and in a format that can be understood by all involved in running and saving into DC pensions. In light of the intentions of the FCA's regulation in the first place, that appears to be a productive step forward."

In the autumn, the FCA is set to publish five voluntary cost disclosure templates for schemes and managers to use, with an aim for these to become a standardised methodology. 

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• Topics
• Defined Contribution
• asset manager
• LCP
• DC investment survey
• Transaction costs
• Chairs statements
• defined contribution
• report
• Trustee
• Financial Conduct Authority
• Laura Myers