The newly launched Cost Transparency Initiative will work on implementing, promoting and encouraging the use of new cost transparency templates across the pensions and investment industries.
The templates are designed to allow for comparisons to be made across suppliers to make it easier for trustees to scrutinise and challenge costs.
The group is supported by the Pensions and Lifetime Savings Association (PLSA), Investment Association and Local Government Pension Scheme Advisory Board following on from the Institutional Disclosure Working Group’s (IDWG) report to the Financial Conduct Authority earlier in this year.
Dr. Christopher Sier, FRSA, who was chair of the IDWG, has built a low-cost platform to collect, summarise and report data to trustees. Sier says the platform, called ClearGlass, will be made public once the templates are released by the FCA.
Cost Transparency Initiative chair Duffield was formerly deputy director at the Pensions Policy Institute and head of research and strategic policy at PLSA.
Duffield says: “I’m delighted to have been appointed as the inaugural Chair of the Cost Transparency Initiative. It hasn’t always been possible for trustees to compare costs between different services because of a lack of clarity and consistency. By introducing a robust way to define and measure the full cost of investing, we have a golden opportunity to make a real difference across the institutional investment market.
“I’d like to thank all the members of the IDWG for their hard work getting us to this point and I look forward to taking the baton forward with the other Cost Transparency Initiative members. We are looking to have an excellent mix of experience and skills in the new group which will ensure we are well placed to deliver this important piece of work.”
PLSA chief executive Julian Mund says: “The PLSA is committed to taking forward the work of the IDWG and is pleased to be playing a key role in support of its successor body. This is a step forward for cost transparency where both schemes and providers benefit from one common, standardised way of assessing and providing costs.”
Investment Association chief executive Chris Cummings says: “We welcome the launch of the Cost Transparency Initiative. Our industry is fully committed to transparency of costs and charges for all investors. We look forward to working closely with the PLSA and Local Government Pension Scheme Advisory Board to build on the progress of the IDWG, to deliver a template which will enable costs and charges to be reported in a clear and comparable manner for institutional investors.”
Cllr Roger Philips, Chair of the Local Government Pension Scheme Advisory Board, says: “The Scheme Advisory Board continues to be fully supportive of investment cost transparency initiatives as demonstrated by the introduction of its own Code of Transparency which now covers some £180bn of scheme assets. The Board is delighted to be part of taking the work forward to the wider institutional space which will enable trustees to make fully informed, value led investment decisions and further trust in the sector by embedding clarity and openness in a previously opaque market.”
The Cost Transparency Initiative will now look to appoint further members to the group and, over the coming months, run a pilot with a number of schemes and asset managers to test the templates and associated technical and communication materials.
Dr. Christopher Sier, FRSA, Chair FCA IDWG said: “I won’t hide from the fact that most of the IDWG templates are complicated, which is why we created the ‘User Template’. This summarises all key data fields, but only once the complex templates have been completed. However, the process of collecting and summarising cost data may remain complex. But obtaining your costs should be easy and understandable and it certainly shouldn’t be costly. It goes against the grain that the process of cost discovery might itself cost a lot of money. Which is why I support any company that offers help to trustees, so long as that help is not itself expensive. It’s also why I have already built a platform to collect, summarise and report to trustees in as low price, commoditised and automated fashion as it is possible to achieve. The platform is called ClearGlass and it will be released once the templates are released by the FCA.”
Transparency Task Force founding chair Andy Agathangelou says:“I believe the imminent supply of costs data made possible by the success of the FCA’s Institutional Disclosure Working Group means we are at an inflection point in our trek towards transparency. For trustees of pension schemes the challenge will move from not having sufficient cost data to having too much to easily cope with.”