Institutional disclosure working group

Update on progress

In June 2018, the FCA received the report of recommendations from the IDWG.

The IDWG also published a summary of their recommendations. The FCA publicly welcomed the recommendations in July 2018.

As part of the recommendations, the IDWG encouraged the formation of a group to own the outputs of the work so far, curate and update the framework going forward, encourage and support the use of the templates as well as monitor their use. As planned, the Cost Transparency Initiative (CTI) was formed over the summer and was announced in November 2018 alongside our release of the IDWG recommendations report. The FCA welcomed the launch of the Cost Transparency Initiative.

Further information can be found on the CTI webpage.

The FCA will reconsider the issue of disclosure to institutional investors in the future if the FCA has any reason to be concerned about the effectiveness of how the IDWG recommendations have played out in the market.

Background and launch

The IDWG was set up to support consistent and standardised disclosure of costs and charges to institutional investors.

In the asset management market study final report the FCA proposed a package of remedies to make competition work better in this market, and protect those least able to actively engage with their asset manager. The FCA considered 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.

The 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, including through more consistent and standardised disclosure of costs and charges to institutional investors.

In June 2017 the FCA appointed Dr Chris Sier to chair the IDWG. 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 were Jeff Houston and Gregg McClymont.

The working group members and observers were:

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

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

December 2017 summary of progress

The IDWG reported progress against the Terms of Reference (PDF).

The IDWG 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.

IDWG – February 2018 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 recommendations 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]