David Cameron has today told MPs the Government will be working with the FCA to increase fee transparency during this parliament.
“I think one of the things that saps people’s enthusiasm for investing in savings products is just a sense they don’t understand the fees and charges and don’t know what they will get out of them,” the Prime Minister said during question time this afternoon.
“The Financial Conduct Authority are committed to making regulations with us during this parliament requiring the publishing of more costs and charges. So we’ve given ourselves the legal duty to do so,” Cameron said.
The Prime Minster was responding to a question by Conservative MP Tom Tugendhat, who pointed out that hidden fees “can strip as much as a third off the gains a pension could make over a lifetime”.
Tugendhat’s question in parliament follows his comments in City AM today, where he argued fund managers should have a legal duty to be open with their clients.
Tugendhat wrote of his difficulty trying to establish exactly how much he was being charged in investment management fees – only finding some clarity when he threatened to use a Freedom of Information Act request.
“I’m a Conservative. That’s why I believe in free markets and competition,” Tugendhat wrote. “I have no problem with companies offering different services and being paid for it. But what we’re seeing in the investment industry isn’t a free market. Hidden fees make proper comparison, and therefore competition, impossible.”
Tugendhat argued the Advertising Standards Agency and the Department for Work and Pensions needed to work with the investment industry to address the issue.
Figures released by SCM Direct earlier this month stated that asset managers are hiding £1.75bn in fees each year by not declaring portfolio turnover and transaction costs.