Corporate Advisory

FCA publishes final report into Asset Management

The final report from the FCA today confirms the findings set out in the interim report published last year. Findings conclude that:-

Price competition is weak in a number of areas of the industry.

Evidence of sustained high profits over a number of years.

Found that investors are not always clear what the objectives of funds are, and fund performance is not always reported against an appropriate benchmark.

Concerns about the way the investment consultant market operates.

The remedies the FCA are taking forward fall in to three areas.

To help provide protection for investors who are not well placed to find better value for money, the FCA proposes to:

  • Strengthen the duty on fund managers to act in the best interests of investors and use the Senior Managers Regime to bring individual focus and accountability to this;
  • Require fund managers to appoint a minimum of two independent directors to their boards;
  • Introduce technical changes to improve fairness around the management of share classes and the way in which fund managers profit from investors buying and selling their funds.

To drive competitive pressure on asset managers, the FCA will:

  • Support the disclosure of a single, all-in-fee to investors;
  • Support the consistent and standardised disclosure of costs and charges to institutional investors;
  • Recommend that the DWP remove barriers to pension scheme consolidation and pooling;
  • Chair a working group to focus on how to make fund objectives more useful and consult on how benchmarks are used and performance reported.

To help improve the effectiveness of intermediaries, the FCA will:

  • Launch a market study into investment platforms;
  • Seek views on rejecting the undertakings in lieu of a market investigation reference regarding the institutional advice market to the Competition and Markets Authority;
  • Recommend that HM Treasury considers bringing investment consultants into the FCA’s regulatory perimeter.

See final report here