Tuesday, July 4, 2017
New Report Aims to Improve the UK Asset Management Industry
The FCA's latest report highlights our concerns and we welcome the long overdue package of remedies proposed...
The Financial Conduct Authority has released its final report detailing the findings of its Asset Management Market Study.
The report aims to make the UK asset management industry a more attractive place for investors by helping to make their money work well for them, providing better protection and increasing the transparency of costs so that those seeking information can access it.
The key findings of the report were:
- investors are not always clear about what the objectives of funds are
- fund performance is not always reported against an appropriate benchmark
- a number of concerns exist regarding the way that investment consultants operate
To combat these concerns, the FCA has proposed a package of remedies to improve clarity in the UK asset management market:
The FCA is going ahead with its plans to introduce an all-in fee which means that investors must have a clear indication of ALL costs associated with owning an investment. Currently it is possible for fund managers to have hidden undisclosed costs.
Clearer Objectives & Benchmarks
A working group will look at how benchmarks are used and performance reported. Managers will also be required to be clearer about why a certain benchmark has or has not been used, as well as looking at whether the use of benchmarks by firms is consistent across their marketing materials.
The FCA will be investigating performance fees further, particularly when asset managers are using what may be inappropriate benchmarks to trigger performance fees.
Absolute Return Funds
The report expressed concern about absolute return funds which are producing persistently negative returns or misleading performance in terms of benchmark use.
So what does this mean for FPC and our customers?
The FCA report highlights issues we have been concerned about for many years and we welcome its findings which are long overdue.
Our investment process has been carefully designed to deliver total clarity and transparency in terms of costs and risks. We screen out funds which do not adopt a similar approach so that we can deliver what you expect with no hidden costs or surprises.