Institutional disclosure working group

The institutional disclosure working group has been set up to support consistent and standardised disclosure of costs and charges to institutional investors.

In the final report for our asset management market study we proposed an overall package of remedies to make competition work better in this market, and protect those least able to actively engage with their asset manager. We consider that this will increase efficiency, lead to the UK asset management industry being a more attractive place for investors and so improve the relative competitiveness of the UK market.

Our overall package of remedies is designed to bring together a consistent and coherent framework of interventions. The remedies package seeks to enable those investors who are able, to exert greater competitive pressure on asset managers. It will increase the transparency of costs so that those seeking information can get it.

We want to see more consistent and standardised disclosure of costs and charges to institutional investors.

We have appointed Dr Chris Sier to chair an institutional disclosure working group of industry and investor representatives, with a view to agreeing a template for disclosure of costs and charges. Dr Sier is Professor of Practice at Newcastle University Business School and is an expert in pension scheme costs and charges who has worked closely with the Local Government Pension Scheme (LGPS) in developing their template for institutional disclosure. Dr Sier is also the government’s FinTech envoy for the north of England. 

The co-deputy Chairs of the working group are Jeff Houston and Gregg McClymont.

The working group members and observers are:

  • Stewart Bevan
  • Jason Bullmore 
  • Richard Butcher
  • Dr Iain Clacher
  • Ralph Frank
  • Teresa Fritz
  • Joanne Getty
  • Tim Giles
  • David Hutchins
  • Piers Lowson
  • Gurpreet Manku
  • Thomas Mercier  
  • James Mowat
  • Mark Rowe
  • Mark Sherwin
  • Sarah Smart
  • Dr Ali Toutounchi
  • Graham Vidler
  • Financial Conduct Authority
  • Department for Work and Pensions
  • Organisation for Economic Co-Operation and Development
  • Trades Union Congress
  • CFA Institute

Read the working group's terms of reference (PDF) and supplement to the terms of reference (PDF)

We are keen to hear views from stakeholders on this work. Please email: [email protected]

Summary of progress

The Institutional Disclosure Working Group (IDWG) has reported progress against the Terms of Reference (PDF).

The IDWG has proposed a design for a disclosure framework that builds a high level summary for investors from a set of more detailed templates containing granular data on costs and returns.

The IDWG has discussed:

  • An overall framework in which the data collection and resulting disclosure templates are based on the underlying granular detail. Appropriate aggregation methods are currently being discussed with the aim of providing transparency, comparability and the ability to assess value for money. 
  • Core elements of the approach for the disclosure template(s) include:
    • A hierarchy of costs for the purpose of detailed underlying data collection which can then be aggregated up for appropriate disclosure.
    • An initial focus on Defined Benefit (DB) pension funds with the intention of both testing the underlying detail of costs at asset class level and better understanding the needs of this significant investor category. The IDWG aims to expand this at a later stage to cover disclosure to other significant institutional investor types including trustees and IGCs of Defined Contribution (DC) schemes and other users.
    • A data structure that provides a useful and accessible high level summary of costs and returns for users that is created by aggregating the more detailed costs at asset and account level. The user will have the opportunity to drill down into the detail underneath.
    • Due regard for regulatory requirements (for example MiFID II, PRIIPs, AIFMD) and how these may interact with the structures of costs at different levels in the template.

From now the IDWG plans to undertake more detailed work on how the template could be provided and used.

Invitation to engage

The IDWG is testing the framework with a small sample of stakeholders, both to understand how easy it is for asset managers to input the detailed data and to hear how useful users find the proposed disclosures. If you are interested in being part of the testing group, as either a user or provider of the information, please get in touch by contacting [email protected]

The IDWG welcomes your feedback. If you would like to request a conversation with a member of the IDWG to discuss the current draft prototype template please also contact us at the above email address.

Meeting discussion summaries

IDWG – Engagement event

The IDWG hosted a successful stakeholder event on 8 February 2018. This provided an opportunity to discuss the progress of the IDWG work so far and gather feedback from stakeholders.

The event was introduced by Mary Starks – Chief Economist and Director of Competition at the FCA, who thanked stakeholders for the significant contributions and progress made in this space to date, including by those involved in this initiative. She also set the scene in terms of the context in which the IDWG is working, including regulatory initiatives in this space.

This was followed by a technical session presented by members of the IDWG. The Group explained that they are making progress towards improving clarity of charges for investors through the development of a framework with three levels of user, account and reference templates. The members explained the rationale for their design choices, as well as the principles that underpin the framework. The Group recognised that there are some elements of the templates which are more advanced than others, and that further work is ongoing. The IDWG reiterated their plan to present this to the FCA as soon as possible so that it can be adopted by the market and investors can benefit from the increased transparency it will provide. A technical question and answer session followed this section of the event.

The event was closed by representatives from the user, producer and regulator looking to the future and how the work of the IDWG can be embedded. Jeff Houston (LGA – Head of Pensions) spoke about the need for this template to be demanded by the suppliers and the users, and also noted that it is important to consider how best to articulate costs to trustees so that they can better understand the value of the services they receive. Chris Cummings (IA – Chief Executive) included his view that the work of the IDWG presents an opportunity for industry to work together with regulators and investors to improve transparency. Robin Finer (FCA – Head of Wholesale & Investments Competition Department) expressed his pleasure at the progress made by the IDWG and how the FCA was looking forward to seeing final recommendation on the template in the near future.

The event was attended by more than 80 stakeholders representing industry and investors as well as other interested parties. For further information please contact [email protected]