FCA clamps down on asset managers
The Financial Conduct Authority has called for asset managers to overhaul their charging structures and prices following a near two-year consultation on the £7trn industry.
In the final findings of its asset management market study, the regulator said competition in the market is weak and greater transparency is needed on prices.
The report found that despite a large number of firms operating in the market, there was evidence of sustained, high profits over a number of years. It also found that investors are not always clear what the objectives of funds are and fund performance is not always reported against an appropriate benchmark.
Chief executive Andrew Bailey said: "The asset management sector is important to the economy, managing the savings of millions of people and in the current low interest environment it’s vital we help people earn a return on their savings. We need a competitive sector, attracting investment into the United Kingdom which also works well for the people who rely on it for their financial wellbeing.
“We have listened carefully to the feedback we received in response to our report last November. We have put together a comprehensive package of reforms that will make competition work better and help both retail and institutional investors to make their money work well for them.”
The FCA outlined a number of proposals, which include a single, "all-in" fee to investors to drive competitive pressure on asset managers. It also put forward a requirement that fund managers appoint a minimum of two independent directors to their board.
Other recommendations included strengthening the duty on fund managers to act in the best interests of investors and launching a market study into investment platforms. The implementation of the remedies will take place in a number of stages, with some requiring consultation and others currently being taken forward.