LGPS fee transparency initiative captures third of market

A new code of transparency for the Local Government Pension Scheme has already been signed by 14 asset managers. The code was announced in May by the Local Government Pension Scheme Advisory Board (LGPS SAB) to encourage a move toward investment fee transparency and consistency.

The announcement of the 14 signatories – representing around a third of assets in the LGPS – comes after the Financial Conduct Authority announced that it is to undertake work on disclosure rules covering the wider asset management industry.
The list of managers signed up to the LGPS transparency code include Legal & General Investment Management, Baillie Gifford and Capital International.
It also includes LPP Investments, a subsidiary of the Local Pensions Partnership, an LGPS pool created by Lancashire County Pension Fund and London Pensions Fund Authority.

Speaking to Room151, a spokesperson for the pool said: “LPP fully supports the aims and processes the code promotes in respect of transparency of investment management costs. LPP’s heritage is LGPS, our clients are LGPS. We fully support greater transparency and disclosure of costs.”

The LGPS SAB is understood to be forming a working group to procure a third party to check compliance and potentially provide aggregation and analysis services for pools.
Liam Robson, pensions analyst at the Local Government Association, told Room151: “The third party will be there to check the LGPS code is working.  They will be checking for consistency and compliance.”
In addition, the board is working on a template to cover alternative asset classes.
The code is voluntary and signatories have a year’s grace to begin reporting in the format required by the board.

In a separate move, the FCA has appointed Dr Chris Sier to chair a working group of industry and investor representatives to work on a template for disclosure of costs and charges across the wider asset management industry.
Sier worked on developing the LGPS code, and it is hoped that the FCA code will dovetail neatly with what is already in place.
The first meeting of the FCA group is scheduled for next month, and the FCA hopes that agreement will be reached by the end of the year on a standardised disclosure template for mainstream asset managers, “building on the work already done by the Investment Association, LGPS and others”.
A statement from the FCA said: “Dr Sier will assemble the working group shortly, which will include a range of industry and investor representatives, and will seek views from other stakeholders as part of their work.”
The group will later consider disclosure for non-mainstream asset managers.

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