Mark Fawcett, chair of the Investment Association’s (IA) independent advisory board on cost disclosure, has declined to endorse the findings of widely criticised IA report on fees, noting the board was not consulted on its contents prior to publication.

In a letter sent to editors of a number of publications, including IPE, Fawcett stressed that, in the board’s view, investment costs mattered to all those managing assets on behalf of long-term savers in the UK.

Acting as chair of the board rather than in his capacity as CIO at the £1bn (€1.1bn) National Employment Savings Trust (NEST), Fawcett said that he and other members of the independent review board believed the industry could improve on its current level of fee disclosure.

“Members of the Investment Association’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,” the letter said.

“We are committed to genuine transparency in investment cost disclosure and wish to make clear we were neither consulted on nor endorse the Investment Association’s recent report on investment costs and performance.

“However like many in the industry,” Fawcett concluded, “we are reviewing its contents and will be feeding back detailed comments to the Investment Association in due course, as part of our advice on cost disclosure.”

Responding to Fawcett’s letter, a spokeswoman for the IA told IPE it welcomed the advisory board’s input as work on the new disclosure framework progressed. 

”More than ever,” she said, “it is vital that savers and those who make investment decisions on their behalf have full confidence in the pensions and investment management industries.”

‘Loch Ness’ fees

The IA’s research, conducted by Fitz Partners, was released earlier this month, weeks after the industry body announced Fawcett as the chair of the 12-strong independent board meant to offer advice on a new cost disclosure framework for the sector.

The research examined a universe of equity funds, and concluded that average fund transaction costs stood at 0.17% across the sample of funds, which captured cost data from a three-year period starting in 2012.

In its accompanying commentary, the IA claimed the findings cast doubt on “hidden-fees hysteria”, and likened the existence of such hidden costs to the Loch Ness monster.

Reaction from fee campaigners was swift, with Con Keating, head of research at BrightonRock Group, attacking the IA’s findings.

“I have read many hundreds of empirical financial studies and reports, perhaps even thousands,” Keating wrote in a riposte for IPE.com. “This report is by far the worst – so bad that it is offensive, insulting both our common-sense and intelligence.”

The founding chairman of the Transparency Task Force was equally scornful, questioning the “churlish” invocation of the mythical beast, and saying hidden fees were a “festering sore on the face of financial services”.

The UK’s local government pension schemes are separately drawing up a new framework for fee disclosures, which is hoped will be in place by the autumn. 

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