Thursday, April 05,
2018 03.42PM / FCA
Conduct Authority (FCA) 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.
- 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
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
- 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 dont follow their investments
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
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.
Woolard, Executive Director of Strategy and Competition at the FCA said:
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. Thats 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.
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.
- 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.
- FCAs 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
- 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.
- Find out more
information about the FCA.
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