IPAC at odds with ISI

IPAC Securities has taken exception to the ISI's position on star ratings.

Thursday, May 14th 1998, 12:00AM

IPAC Securities doesn't believe that it is the role of the Investment Savings and Insurance Association (ISI) to get involved in its dispute with competitor FPG Research over the use of star ratings.
The ISI, at its board meeting last week, decided it was inappropriate to have two star rating systems using completely different methodologies in the market place, as the public may get confused.
Consequently it wrote to both parties asking them to sort the issue out. Executive director Roger Gill says the ISI has offered to mediate in the dispute.

IPAC general manager David van Schaardenburg says it is not the ISI's role to become involved in the dispute, and its recent actions are anti-competitive.
He says the development and use of star rating decisions is a commercial decision made by the research companies, likewise how they wish to use them is a commercial decision.
"IPAC believes it is inappropriate for the ISI to be adjudicating on an issue relating to normal competitive business practise and to be seeking to influence the way in which those that analyse the funds management industry go about their research activities," he says.
However, Gill says it is quite proper for the ISI to have a point of view on this matter as it's not a question of competition.
He says the two rating systems are done on a completely different basis, so they can't be directly compared to each other.
Gill says the ISI hasn't backed one system over the other, nor has it made any decision, rather it has advised the parties, "that the board considers the systems could potentially be confusing (for the public)."
Van Schaardenburg says IPAC has discussed its proposed star rating process with a number of its clients, including funds management companies, and the ratings information has met with their approval.
"In IPAC's opinion the final decision on the merits or otherwise of fund ratings should be left with the end users of such fund ratings research, being investment advisers and the investing public," he says.

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