Edition: June / Aug 2017
Fee, fi, fo . . .
In the contested umbrella-fund industry,
Wierzycka replied: “Please ensure that if you decide to once again write about Sygnia or SURF, you make it clear that Sygnia has had no input into your article and hence you cannot vouch for the accuracy of what you are publishing.”
Okay then. Done.
Obscurity appears to be at odds with transparency in trying to pick through the Sygnia funds’ fact sheets. In some, for example three Skeleton funds as at end-March, there is no published disclosure of fees; instead, it’s stated that the information will be provided on request. In some others, there’s more than one actuary who finds it challenging to look through the effects of allocations to Sygnia’s in-house hedge funds.
If Wierzycka can be meticulous in analysing the costs and claims of her targets – she’s certainly prolific in her ‘Daily Maverick’ series – then she might expect that similarly-qualified professionals would want to take a closer look at Sygnia’s own costs and claims too.
For bullet-proof confidence on how Sygnia stacks up, there are two industry bodies able to undertake independent research and produce objective findings. All they need do is compare the marketing claims against the full gamut of fees actually charged, and perhaps also come to a view on whether the disclosure that “a schedule of fees and charges is available on request” is adequate for their requirements.
One body is the Financial Services Board. Leanne Jackson, who heads the ‘Treating Customers Fairly’ initiative at the FSB, comments:
Among the six desired TCF Outcomes are those providing that “Customers are provided with clear information and kept appropriately informed before, during and after the point of sale” and that “Products perform as firms have led customers to expect”. In the investment space, achievement of these outcomes requires disclosure of product costs and the impact of such costs and investment returns to be clearly, accurately and meaningfully disclosed.
The TCF principles are further underpinned by a number of specific rules-based provisions, including detailed cost-disclosure requirements under the Financial Advisory & Intermediary Services Act (FAIS) and the Collective Investment Schemes Control Act. FAIS also includes requirements to ensure that any comparisons between products or providers are fair and accurate. There is also a process underway (where) disclosure standards are a particular focus area.
Whether the relevant TCF principles and/or current specific disclosure rules have been breached in the case you have highlighted, would of course need to be based on a specific investigation.
The other body is the Association of Savings & Investment SA of which Sygnia is a member. ASISA senior policy advisor Taryn Hirsch comments:
While ASISA cannot force members to comply with the ASISA standards, they are standards of good practice and all ASISA members undertake to comply with them.
The ASISA standards are developed and put together with the regulator’s knowledge and support. In particular, the standards have been framed with the regulator’s ‘Treating Customers Fairly’ initiatives in mind. Although we cannot enforce compliance as such, members face considerable industry pressure and reputational risk by not complying. The savings and investment industry is highly competitive, and competitors keep a close eye on each other’s practices.
To ensure meaningful cost disclosure to clients, last year ASISA introduced the Effective Annual Cost (EAC) standard. This standard facilitates a standardised approach to cost disclosure by product providers that consumers and advisors can use to compare charges in a meaningful way irrespective of whether the product is a unit trust, a living annuity, a retirement annuity or an endowment policy.
Consumers are therefore entitled to request the EAC disclosure from companies when deciding where, and in what products, to invest. The EAC standard outlines the recourse that advisors and/or clients have should they have reason to believe that the calculations used by an ASISA member company, in determining the EAC contained in the quote, were not correct.
The to-and-fro between Sygnia and TT is best left for FSB and ASISA interventions.