The Financial Conduct Authority has today published the latest
step in its response to the concerns identified through
its asset management market
study. This is part of a package of
remedies to ensure fund managers compete on the value
they deliver, and act in the interests of the millions who
entrust them with their savings.
Today’s publications include:
-
Final rules following a previous consultation, focused on
the duties of fund managers as the agents of investors in their
funds
-
A consultation on proposed rules and guidance, focused on
improving the information that investors get about funds
These documents address concerns outlined in the June 2017
final report of the asset management market study and are an
important part of a wider package to improve competition in this
industry for consumers.
The final rules and guidance cover:
-
a requirement for fund managers to make an annual
assessment of value, as part of their duty to act in the best
interests of the investors in their funds
-
a requirement for fund managers to appoint a minimum of
two independent directors to their boards
-
the introduction of a new prescribed responsibility under
the Senior Managers and Certification Regime to bring
individual focus and accountability
-
technical changes to (i) improve fairness around
the way in which fund managers profit from investors buying and
selling their funds and (ii) facilitate the movement of
investors into cheaper share classes
These measures will deliver better protection for all investors,
both those who are actively engaged with their investments and
those who don’t follow their investments closely.
To address its concerns that even actively engaged investors do
not find it easy to choose which fund is right for them, the FCA
is today publishing a further consultation on remedies related to
funds providing better information about what they are offering.
This includes proposals on:
-
how fund objectives can be expressed more clearly and be
more useful to investors
-
making it clearer when funds are benchmark-constrained,
or limited in how far their holdings can differ from the
weightings of a benchmark index
-
ensuring that where a fund uses one or more benchmarks,
this is disclosed consistently and explained to
investors
The FCA has also today published an Occasional Paper setting out
the results of behavioural research which looked at how different
ways of presenting information about charges affected
investors’ decision-making and their understanding and awareness
of charges. This paper can be read here.
Christopher Woolard, Executive Director of Strategy and
Competition at the FCA said:
“The investment choices open to people, and the decisions they
make on how to invest, can have a profound impact on their
financial health. They can also have consequences for their
families, as well as society as a whole. That’s why it is
important the asset management industry, which looks after the
savings of millions of investors, is working as well as possible.
But our market study found evidence of weak price competition in
a number of areas.
“Today’s announcements are an important part of a package of
measures that, combined, aim to achieve a fair, transparent, open
and accountable market.”
Firms have 18 months to implement the rules on assessment of
value and appointment of independent directors and 12 months for
the rules related to the way in which fund managers profit from
investors buying and selling their funds.
Notes to editors
-
PS18/8: Implementing
asset management market study remedies and changes to our
Handbook.
-
CP18/9: Second
consultation on remedies following the asset management market
study.
-
Occasional Paper No. 32:
Now you see it: drawing attention to charges in the asset
management industry.
-
FCA’s Asset Management
Market Study.
-
The FCA was assisted by members of
the Fund Objective Working
Group in developing the proposals on fund
objectives, in conjunction with consumer input, as to how
objectives may be explained more clearly to investors.
-
Alongside this, other work continues which will benefit
investors by improving cost transparency. The FCA is supporting
an independent Institutional Disclosure
Working Group which is on track to make
recommendations on a framework to support consistent disclosure
of costs and charges to institutional investors.
-
Asset Management Market Study: Final decision to make a
Market Investigation Reference on investment consultancy
services.
-
On 1 April 2013 the Financial Conduct Authority (FCA)
became responsible for the conduct supervision of all regulated
financial firms and the prudential supervision of those not
supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring
the relevant markets function well. To support this it has three
operational objectives: to secure an appropriate degree of
protection for consumers; to protect and enhance the integrity of
the UK financial system; and to promote effective competition in
the interests of consumers.
