I&P Europe reported today that the U.K. Financial Conduct Authority (FCA) will launch a new consultation with the British stakeholders concerning the main elements of the code of conduct it envisages for asset managers in the investment sector.
The first report of the FCA, launched in 2015 (Asset Management Market Study), puts forward three main findings. First, that the industry lacks price competitiveness; second, although, on average, active funds outperform their benchmarks, after deduction of fees results turn negative, leading to an overall underperformance; third, investment funds’ policies lack transparency on objectives and charges. To this extent, the FCA proposes remedies for these findings, albeit stating that new rules will not be adopted without cost-benefit analysis and formal consultations with the stakeholders.
This is why the envisaged remedies of the first study continue to be scrutinized and form the object of a new consultation. In the attempt to increase customer (investor) protection and restore their confidence in the industry, the FCA’s consultation papers target conduct of business rules, such as value for money, a unitary, all-in fee for asset management and increased transparency with regard to investment objectives and charges.
The incentive is welcomed, as retail investors’ participation in the capital markets is considerably low despite the high degree of household savings, overall, in Europe (for more information, see BETTER FINANCE’s report on Robo-Investing).
Read BETTER FINANCE’s article on the FCA’s first report here.
Read BETTER FINANCE's article on Morningstar calling for disclosure of fund management fees.
Photo credits to Reuters/Chris Helgren, source.