Reaction to the FCA’s policy on disclosing costs and charges
04 Feb 2020
Commenting on the FCA’s policy on disclosing costs and charges to workplace pension scheme members published today, Rona Train, Partner, Hymans Robertson, says:
“In the short term, providers will only have to publish costs and charges information on default arrangements, rather than full fund ranges. With this, the FCA is focussing on the importance of charges to those who (generally) do not make an active decision where to invest their pension assets. This seems logical and will cover the vast majority of members in DC arrangements. The assumption is that, for those self-selecting, they will have made an active decision, based on a number of different criteria including charges, where their money is invested. Whilst this may be the case, in reality, many members will not have based their decisions on full knowledge of costs and charges.
“Transaction costs are hard for members to understand anyway and showing negative transaction costs may cause further confusion for members – even if negative transaction costs are actually a good thing for members! Taking away the need to show negative transaction costs, whilst not showing members the full picture, may actually help with members’ confidence in the disclosures.
“It’s a delicate balance for the FCA of requiring providers to produce the information that’s relevant to the majority of DC members and giving potentially hundreds of pages of information which members will generally find impenetrable.”