fca publishes asset management market study final report and consultation paper

FCA has published the final findings of its asset management market study. As part of this, FCA set out a package of remedies to address the concerns identified.

Alongside the market study, FCA has published a consultation paper on implementing the asset management market study remedies and changes to the Handbook.

FCA conducted analysis of over 20,000 shareclasses and 30,000 investment strategies.

The final report follows the interim report published last year which found that price competition is weak in a number of areas of the industry. Despite a large number of firms operating in the market, based on FCA’s sample, they found evidence of sustained, high profits over a number of years. FCA 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. Finally, FCA found concerns about the way the investment consultant market operates.

FCA has proposed an overall package of remedies to make competition work better in this market, and protect those least able to actively engage with their asset manager.

FCA consider that this will increase efficiency, lead to the UK asset management industry being a more attractive place for investors and so improve the relative competitiveness of the UK market.

FCA’s overall package of remedies is designed to bring together a consistent and coherent framework of interventions. FCA recognise that some investors are not well placed to find better value. Because of this, FCA are strengthening the duty on asset managers to act in the best interests of investors and are seeking to provide greater protection for investors. The remedies package also seeks to enable those investors who are able, to exert greater competitive pressure on asset managers. It will increase the transparency of costs so that those seeking information can get it. FCA is also working towards providing greater clarity of fund objectives and performance reporting. Finally, the package seeks to improve how effective intermediaries are for both retail and institutional investors.