Buy-side faces further cost probing from FCA

FCA proposes full disclosure of transaction costs to pension schemes that invest in funds.

The UK Financial Conduct Authority (FCA) has proposed asset managers disclose and evaluate transaction costs on pension scheme investors.

It has proposed “to place a duty on asset managers” to provide a detailed breakdown of transaction costs on request, with categories of identifiable costs including taxes and securities lending.

Currently, independent governance committees (IGC) are required to request and report on transaction costs as far as they are able, but the FCA is looking to ensure asset managers provide full disclosure. 

The FCA said the new rules will “deliver a high degree of consistency in how transaction costs are reported”, and give regulators a more comprehensive assessment of costs.

A calculation method has also been proposed to evaluate transaction costs, which compares the price of transaction to the price when the order entered the market.

Christopher Woolard, executive director of strategy and competition at the FCA, said the proposal allows IGCs “to see fully the transaction costs that their funds pay.”

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