Proposals to reform asset management

Changes would strengthen oversight of the sector for savers

The UK financial regulator has tabled sweeping reforms to overhaul the country’s asset management industry.

The Financial Conduct Authority (FCA) study into the sector detailed a series of concerns.

It found price competition is weak, investors are not always clear what the objectives of funds are, and fund performance is not always reported against an “appropriate benchmark”.

The FCA added that despite a large number of firms operating in the market, there is evidence of sustained high profits over a number of years and there were concerns about the way the investment consultant market operates.

It is now proposing a series of remedies including supporting the disclosure of a single, “all-in” fee to investors, as well as “consistent and standardised disclosure” of costs and charges to institutional investors.

The FCA also wants to strengthen the duty on fund managers to act in the best interests of investors

Fund managers will also be required to appoint a minimum of two independent directors to their boards, introduce technical changes to improve fairness around the management of share classes, and examine the way fund managers profit from investors buying and selling their funds.

FCA 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 need a competitive sector attracting investment into the United Kingdom. ANDREW BAILEY