Gina Miller calls for investigation into “price collusion”

Gina MillerGina Miller, the vocal supporter of passive investment, has called on UK financial and competition authorities to investigate whether there is price collusion within the active fund management industry.

Backing the Financial Conduct Authority (FCA), which is concerned there is “limited price competition” between active UK funds, Miller said 70% by number and 73% by value of the UK’s actively managed equity funds had an identical annual management charge (AMC) of 0.75%.

Miller, famous for her legal challenge to the UK government’s plans to trigger Brexit without a vote by MPs, said the finding proved there was “no genuine price competition” within the sector and she wants the FCA and the Competition and Markets Authority to investigate.

SCM Direct, a wealth manager Miller co-founded and that invests client money in passive funds, carried out the research.

Miller said that evidence of price clustering for active equity funds at both 1% and 0.75% for clean share classes flew in the face of claims from fund groups that they competed to produce the best investment returns.

“This is not only to the detriment of UK investors but also contravenes the FCA’s ‘Treating Customers Fairly’ principle,” she said of the alleged collusion.

“Different products, with different ingredients and vastly different track records should command different pricing.”

Miller added that the Retail Distribution Review of 2012 had been expected to lead to lower fund manager charges for active funds, but research from the last five years showed that charges had not changed since the review.

SCM claimed that if the AMC charged by firms reduced by 0.1% a year – from 0.75% to 0.65% – UK savers and investors would be £488 million (€565 million) better off every year.

Miller said the research also found clear evidence that large funds were not passing on economies of scale to customers through lower prices and were even more likely than smaller funds to charge an identical price.

Last month a former asset management sector leader from the UK financial regulator, Dan Waters, said that he fundamentally disagreed with the regulator’s claim that the UK fund industry is uncompetitive, saying that the UK fund market has the “hallmarks of a highly competitive industry” and that fund fees were steadily falling.

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