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Transparency is still “problem” in transition mgt

31 October 2013


FCA’s director of supervision sheds some light on the soon-to-published results of its investigation into the sector. Stephanie Baxter reports

Read more: Transition management custody FCA

Transition management still suffers from a lack of transparency and client understanding, according to Clive Adamson, director of supervision at the UK Financial Conduct Authority (FCA).

Speaking at the FCA's annual asset management conference in London, Adamson gave some insight into the results of the regulator's investigations into the sector which are due to be published before the end of the year.

The investigations have focused on discovering whether poor transparency and opaque legal documentation could lead to poor consumer outcomes in the provision of this service.

"What we found is that the asymmetry of knowledge between providers and customers, combined with the potential for conflicts of interest to arise on such complex and fast moving transitions mandates may lead to adverse outcomes," said Adamson.

But he was optimistic about the potential to improve transition management services through the use of data and better understanding.

"While transparency remains a problem within transitions management, we believe the provision of more data and greater customer understanding is empowering customer decision-making and will be working with providers and customer groups to ensure improvements continue to be made."

The sector has come under scrutiny from regulators in recent years following allegations that several pension funds were overcharged by State Street's transition managers, although no formal enforcement proceedings have been brought.

When the case came to light, the funds involved were repaid the amounts overcharged and the executives involved are no longer with State Street. The firm has also cooperated with the regulator's investigations.

Global Investor/ISF recently looked at how the transition management industry is attempting to transform itself   to meet the increased demands for transparency.


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