BlackRock has appeared on a list of investment firms failing to adequately disclose fees to some pension clients, more than three years after the fund manager worked with the UK regulator to improve fee transparency for the sector.
Black rock, which has $ 8.7 billion of assets under management, was among 29 fund managers assessed as failing to meet minimum standards to help pension trustees contain costs.
Since 2019, asset managers in the UK, managing tens of billions of pounds of retirement cash, have faced requests to disclose their fees and charges, using standardized models developed by industry working group, convened by the Financial Conduct Authority.
The models were developed to help pension trustees identify fees and dispute fund manager fees. It followed a market study carried out in 2015 by the FCA which revealed weak competition in the asset management sector.
ClearGlass, a company that works with pension funds to secure asset manager billing data, will today publish for the first time a list of managers that meet its minimum quality standards for providing cost data and performance.
As of 2019, ClearGlass has requested and received cost and performance data on over 8,000 portfolios managed for retirement clients by over 400 asset managers.
It found that 242 asset managers met its minimum standards, which included data that was accurate, properly formatted, client-specific and within the relevant reporting period.
Conversely, 29 managers, including BlackRock, Columbia Threadneedle, Aegon UK and Credit Suisse failed the quality test.
“Those who failed did so because of bad data, late data or inappropriate data,” said Chris Sier, founder of ClearGlass, who has been appointed chair of the Institutional Disclosure Task Force, the organization formed by FCA in 2017 to improve fee transparency.
A BlackRock executive served on the working group, which helped develop the standardized cost models.
BlackRock said its clients have been given all the information they need to help them make informed decisions about the value of their investments. “In this case, as discussed in advance with ClearGlass, the format of our disclosure did not meet the required criteria,” said the asset manager. “During 2021, we will work with ClearGlass to deliver our information in the required format.”
Mr. Sier said some pension plan clients who were successful in obtaining data using the new models found their costs to be up to twice as much as previously believed.
“This is because fees that were previously hidden, such as transaction costs, are now visible on the model. It’s starting to have an impact where pension funds try to manage their money. “
Columbia Threadneedle, which did not meet the minimum standard, said: “Customer reporting is an important part of customer service. Last year we introduced a new reporting process for ClearGlass customers and most received the requested information. However, since this was a new process, it took longer to deliver the requests within the allotted timeframe from the start. We are confident that we now have a solid process to meet ClearGlass requirements. “
Credit Suisse and Aegon UK declined to comment. The FCA also declined to comment.
This month, the government decided not to mandate the use of cost models to encourage wider adoption by trustees through a new reporting requirement in plan annual reports.
Fund groups that have failed the ClearGlass standards test
Aegon United Kingdom
I AM Global
Capital of Anchorage
Credit Suisse Asset Management
Capital of the red kite
Royal London Asset Management
The Children’s Investment Fund
Land of water
Minimum standards for a clear pass
An asset manager must, for the majority of their data submissions in the last quarter, have provided data in one of the currently accepted data standards (CTI, ILPA).
Data submitted must be complete, accurate, properly formatted, and include client-specific (rather than pool-level) numbers for the correct reporting period.
The data submitted must be provided no later than the date indicated by the client.
All intermediate requests (such as data verification by ClearGlass) should be handled promptly and appropriately.