FCA study proposes “significant” changes

Posted by on

The UK asset management industry manages £6.9 trillion of assets across retail, institutional and pension funds.

The FCA is focusing on value for money and transparency for all investors as small variations in management fees can have a substantial effect on long term returns, particularly for pensions.

The preliminary findings of the FCA study into a sample of the 1,840 authorised firms in the UK market raises concerns over:

  • Weak price competition materially affecting investment returns
  • Investor returns on actively managed funds (after costs) not outperforming their benchmarks
  • Consistently high profits for investment managers
  • Long standing relationships between consultants and asset managers not in the best interests of the investors
  • Lack of transparency for investors on fund objectives and benchmarked performance

The FCA is currently in open consultation on the preliminary findings (closes 20 February) and have proposed a number of remedies including:

  • Increased accountability for investment managers to act in investors’ best interests
  • “all-in” fee approach to quotations
  • Greater clarity on fund performance for retail investors

If these remedies are translated into new legislation then the burden of demonstrating compliance is likely to fall on the IFA which we see potentially affecting all our clients to some degree. We expect to see further details emerge later in 2017.

Related Services & Sectors