The Investment Association (IA) is looking to “press the reset button” after the communication of its recent report on investment-management fees “inadvertently but understandably upset people”, according to the association’s chair, Helena Morrissey.

Earlier this month, the IA released a report into charges and costs in the UK fund industry, announced by a press release entitled ‘Hidden fund fees: The Loch Ness monster of investments?’.

The Loch Ness monster theme ran through the rest of its press release, referring to “hidden-fees hysteria” and suggesting “‘hidden fund fees’ may in reality be the ‘Loch Ness Monster of investments’”.

The report itself, based on research of active and passive equity funds carried out by the IA with Fitz Partners, did not use this language.

It said there was no evidence implicit costs were significantly damaging investor returns and that, contrary to criticisms, transaction costs linked to portfolio turnover were not “several multiples of disclosed charges”.  

Transparency campaigners were quick to criticise the IA for its statements.

Andy Agathangelou, founding chairman of the Transparency Task Force (TTF), described the reference to the Loch Ness monster as “churlish”, while Con Keating, head of research at BrightonRock, said it was an “offensively” bad report.

Mark Fawcett, chair of the IA’s independent advisory board on cost disclosure, wrote a letter to the editors of several news publications stating that the board had not been consulted on the matter, and that it did not endorse the report.  

Speaking to IPE after a “transparency strategy summit” organised by the TTF on 12 September, the IA’s Morrissey, who recently stepped down as chief executive at Newton Investment Management, said “someone thought, in a communications way, that that would be a good headline for this empirical evidence, but, actually, it then inadvertently but understandably upset people” and “looked more defensive than it should have been”.

Instead, what the association has been trying to do, she said, is work with the Transparency Taskforce and have the advisory board advise the IA on the code and “actually lead the IA’s work, or at least influence it”.

She said she did not sign off on the publication of the report and that Chris Cummings, who has joined the association as its new chief executive, was “in transition”.

She said she was “delighted” to have been encouraged by Agathangelou to attend the transparency event and that she was trying to communicate that the IA was “trying to press the reset button”.

Morrissey added that “we all want transparency” while acknowledging that this “shouldn’t be confused with saying no-one can make any money”, or that there should be no charges for performance.

The key, she said, is that all of this must be disclosed.

One suggestion made by a participant in the transparency event was for the pension industry’s “sell-side” to use a standardised cost-calculation methodology, and Morrissey said she was positive on this as a potential alternative to a code of conduct. 

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