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'Arrogant and complacent' funds taking £35bn in excess fees

'Arrogant and complacent' funds taking £35bn in excess fees

‘Arrogant and complacent’ fund managers are bleeding UK pensions of £35 billion in covert charges a year the chair of the body leading the Financial Conduct Authority’s fee probe has claimed.

Chris Seir, an outspoken campaigner and Newcastle University Business School academic who has worked extensively with local government pension schemes on transparency issues, was appointed to head the FCA’s institutional disclosure working group this summer.

Speaking to the Times in his first interview in his new role, he offered a blistering take on some of the conduct issues which he believes have tarnished the industry’s reputation.

A former detective, he said that despite working for years on the issue, he had never got to the bottom of how much the average manager added to their billables in trading costs, FX commissions, custody fees and other opaque expenses.

‘I’d be surprised if it was much less than 3%,’ he told the paper. ‘I’m willing to be proved wrong. But no one has done so yet. The FCA has found you wanting. You’re not doing yourselves any favours by resisting this.’

He said that while his background was in institutional investment, he believed it likely that retail investors faced similar levels of undisclosed fees, claiming that he had identified 16 layers of intermediated costs on the average ISA portfolio. 'That’s just a simple equity Isa. It’s horrendous.’

He added that since the adoption of a transparency code two years ago, local authority pension funds have reduced the fees expenses by 0.05%.

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