The founder of the Transparency Task Force, a UK-based organisation which campaigns for greater transparency in the asset management industry, has written an open letter to Investment Association chief executive Chris Cummings in which he demands that the organisation admit it was wrong about hidden fund fees being a myth, and famously referring to claims of such fees in 2016 as the “Loch Ness Monster of investments”.
Andy Agathangelou (pictured left), the founding chair of the Transparency Task Force, said in his letter that he had listened yesterday to a BBC Radio 4 programme about hidden fees in which, he said, Cummings had admitted that the language used by the Investment Association in its August 2016 ‘Loch Ness Monster’ press release was “regrettable”.
Noting that the press release was still to be found on the IA’s website, “despite its inaccuracy and its offensiveness”, and that a report by the LangCat asset management consultancy based on new MiFID II data on Monday had revealed what he said was proof of the existence of hidden fees, Agathangelou urged Cummings to, among other actions, “please take [the 2016 ‘Loch Ness Monster press release] down”.
In addition, he said, “Please issue a communication piece clearly stating that the IA’s position that there have not been any hidden fees for all these years has in fact now been proven to have been entirely wrong”; “please issue a public apology about your ‘Loch Ness Monster’ press release to [investment fee transparency campaigners] Gina Miller, Dr Chris Sier and all others that have been campaigning for greater transparency on costs and charges”; and “please ensure that none of your members treat pro-transparency campaigners disrespectfully and discourteously, [including]….the kind bullying and emotional blackmailing mentioned by Gina Miller in yesterday’s programme”.
Agathangelou followed these demands with around four others, ending with “Please do all you possibly can to exert your leadership on your membership such that all your members operate as transparently as possible; because only through transparency do we have any hope of rebuilding trust”.
Agathangelou told International Investment that he copied his letter to John Griffith-Jones, chief executive of the Financial Conduct Authority, UK prime minister Theresa May, and an undisclosed number of media contacts.
He said the timing of the letter was in response to the BBC Radio 4 show, and the LangCat report released on Monday.
As reported, the LangCat researchers looked at investment fund fee data available for the first time under the EU’s Markets in Financial Instruments Directive updates, known as MiFID II, which took effect on 3 January, and found investors had been paying more to fund managers in hidden charges than previously thought, in some cases, significantly more.
IA: ‘under new leadership’
Responding to Agathangelou’s letter, an IA spokesperson noted that the association was now “under new leadership”, and is “wholly focused on delivering on the issues that consumers and our industry care about, such as providing full transparency on costs and charges”.
“A successful example of our work in this area to date includes developing a new cost disclosure template with the Local Government Pension Scheme Advisory Board as part its Code of Transparency, which was successfully implemented last year,” the IA’s statement added.
“We are also working closely and productively with transparency campaigner Chris Sier as part of his role as chair of the FCA Institutional Disclosure Working Group (IDWG), to design a new template on cost disclosure which will be rolled out later this year.
“The group has made excellent progress on this initiative so far and the results will be consulted upon soon.”
In a separate statement, Dr Sier, whose various professional roles include being a visiting professor at the University of Leeds and professor of practice at Newcastle University Business School, acknowledged the fact that the IA had a new management team in place, and said that as a result “whatever went on in the past is currently a distraction, as we are now focused on the future, and on completing the work of the FCA IDWG [set up by the FCA last year]”.
“This is all about proving better outcomes for consumers and this is our common goal,” Dr Sier added.
“The IDWG is in a very good position and has accelerated progress in recent weeks to the point where we have a draft standard for a range of asset classes and fund strategies.
“This draft standard is already being tested with [fund] managers and asset owners after only four months of work.
The results of this initial testing will be presented at the scheduled meeting on 8 February.”