FCA launches 'package of remedies' for asset management sector

"We have put together a comprehensive package of reforms that will make competition work better and help both retail and institutional investors to make their money work well for them."

The FCA's study found evidence of "sustained, high profits over a number of years" and raised concerns about the way the investment consultant market operates.

To drive competitive pressure on asset managers, the FCA says it says a single, all-in-fee should be disclosed to investors as part of a 'consistent and standardised disclosure of costs and charges'.

It also aims to "improve the effectiveness of intermediaries" by launching a market study into investment platforms and asking HM Treasury to bring investment consultants into the FCA’s regulatory perimeter.

The FCA also recommends that the DWP remove barriers to pension scheme consolidation and pooling.

To help provide protection for investors, the FCA plans to use the Senior Managers Regime to help strengthen the duty on fund managers to act in the best interests of investors and will now require fund managers to appoint a minimum of two independent directors to their boards.

Andrew Bailey, Chief Executive at the FCA, 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 have listened carefully to the feedback we received in response to our report last November. We have put together a comprehensive package of reforms that will make competition work better and help both retail and institutional investors to make their money work well for them.”

Gina Miller, founding partner of SCM Direct, commented: "Consistent and standardised fee disclosure in a single number is vital for ordinary investors to make better choices. This should be mandated by the FCA to retail and institutional investors alike rather than just institutional investors or it is inevitable that differing formats by investment groups will make easy comparisons impossible.

"In terms of the numerous consultations and working groups, some appear unnecessary and rules should be brought in straight away to protect savers. More consultations opens the FCA to more self-interested lobbying from the industry and its anti-consumer trade bodies. However, we welcome the announcement of an investigation into the UK platform market as many retail investors and advisers have substantial sums invested via platforms where in some cases the fees appear excessive.

"The fact that the FCA feels it has to state there will be an increased 'duty on fund managers to act in the best interests of investors and use the Senior Managers Regime to bring individual focus and accountability to this' shows how fundamental the dereliction of duty has been in the asset management industry."