The disclosure adds a further element of controversy to the August 9 report, which sought to damp down the debate over disclosure of fund charges. In it the association, which represents managers of £5.5 trillion of funds, said that hidden fees were the “Loch Ness Monster of investments”.
However, in an email Mark Fawcett, chair of the IA’s Independent Advisory Board on Cost and Charge Disclosure, told Financial News: “We are committed to genuine transparency in investment cost disclosure and wish to make clear we were neither consulted on nor endorse the IA’s recent report on investment costs and performance.”
Fawcett, who is chief investment officer of the National Employment Savings Trust which has more than two million members, said: “Members of the IA’s Independent Advisory Board on Cost and Charge Disclosure believe there is scope for improvement in the way the asset management industry discloses transaction costs and in how they talk about the issue with their customers.”
He added: “Investment costs matter to savers and to all those involved in managing the UK’s long-term savings.”
The IA told Financial News that it welcomed “the input of the independent advisory board, as the project to create a new disclosure code accelerates. More than ever, it is vital that savers and those who make investment decisions on their behalf have full confidence in the pensions and investment management industries.”
The IA report has already drawn ire from some industry campaigners who claimed the tone of the report was “churlish” and dismissed what they said were valid points on an important issue.
One of the latest report’s fiercest critics, Andy Agathangelou of the Transparency Task Force, is also a member of the advisory board, which is made up of prominent figures from the investment and pensions industry. Its formation was announced in July 2016.
Fawcett said that, like many in the industry, the board was “reviewing [the report’s] contents and will be feeding back detailed comments to the IA in due course, as part of our advice on cost disclosure”.
The report, published in association with consultants Fitz Partners, was accompanied by a statement from the IA claiming that “hidden cost hysteria” in the industry was misplaced.
Jonathan Lipkin, the IA’s director of public policy, said in this statement: “If you look at the actual performance delivered to fund investors, this is the proof point and we do not see evidence of high transaction costs, either explicit or implicit.”
The Financial Conduct Authority is looking into hidden charges among other issues related to fund management, with its own report expected in November. Some campaigners have alleged such charges are rife – a charge the industry denies.