"Today's findings present a significant challenge to the asset management sector, but one not wholly unexpected. Firms have already focused on transparency and cost, but they clearly need to do more. We've been expecting the regulator to make substantial use of its wide ranging competition powers, and today's interim findings suggest that the asset management sector will feel their full force.
"Measures to enhance the UK's reputation as a leading asset management centre should be welcomed. The diversity of the asset management sector is critical to the success and growth of the UK, and the FCA must balance this in its approach. Consumers rely on asset managers to deliver value, particularly in a persistently low interest rate environment.
"Some of the FCA's remedies may reduce 'costs' to consumers, but we must be careful not to focus purely on 'cost' to the detriment of 'value''. With considered implementation of today's remedies, asset managers will have an opportunity to remind people of the important role the industry has to play.”
Amanda Rowland, PwC asset management regulation partner, added: "The transparency measures introduced through existing MiFID and PRIIPS initiatives will contribute towards enhanced clarity of information for investors, although the FCA makes clear today that more is expected of firms. Experience shows that getting clients to engage with wide-ranging disclosures is a real challenge; firms need to think innovatively about how they can ensure this communication works.
"The FCA is suggesting a 'strengthened' duty of care be imposed to act in the best interests of investors. This will considerably change the way the market operates and will be an enhancement to existing best practice. With the Senior Managers Regime comes accountability but today's study suggests something more - duty of care involves more direct and legally enforceable rights. The industry will need to work hard to demonstrate how it already best serves investors and how they intend to meet the concerns expressed."
The regulator has focused on three broad themes: overall profitability of firms, and in particular actively managed funds; the governance within firms to manage costs and the role of asset managers in acting in the best interests of their clients; and the transparency and engagement of clients with charges. The study can be found here
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