A leading independent pension trustee firm has criticised the increasing regulatory focus on transaction costs and has called for a “single measure” for pension scheme investors to holistically evaluate costs.

The FCA’s Transaction Costs consultation, which closed on 4 January, focused on transparency and its Asset Management Market Study interim report, published in November, concentrated on asset management fees.

Richard Butcher, managing director at PTL welcomed these reports but said the focus on fees distracts from the bigger issue.

 “Anything that puts member outcomes central to its objective is a good thing. But with much of the industry focus and discussion dedicated to transaction costs, there is a real danger that the other costs are overlooked.

“Transaction costs, while hugely important, are just one piece of the jigsaw.”

He said there are other cost areas to consider such as annual management charges (AMC), platform charges, member charges, exit charges as well as custodian and audit fees.

“These costs then vary depending on factors like investment selection and whether any of these costs are bundled up into a single fee. So it’s currently very difficult to get a true picture of what a scheme is really costing its individual members.

“What the industry needs is a single measure to evaluate all of these complex costs in a holistic way. Complete transparency may never be realistically achievable, but that doesn’t mean schemes should be kept in the dark on the fundamental aspects of the costs they bear.

“Let’s hope the FCA’s focus on transaction costs is merely the first step in the right direction and not the last.”