FCA to 'shy away' from fund manager fee cap

The FCA will not cap fund manager fees as part of its review into competition in the asset management industry, according to reports.

Related topics:  Finance News
Rozi Jones
12th September 2016
FCA
"For a proper functioning free market there needs to be complete transparency of all fees in one Total Cost of Investing number, calculated in a mandated format to allow investors the ability to compare."

The review is set to assess how fund managers compete to deliver value and whether they are able to control costs along the value chain.

However The Times reports that the regulator will "shy away from capping the fees that asset managers charge investors".

As part of the review, the FCA was expected to cap annual charges and force fund managers to be more transparent.

The FCA declined to comment, but said that "no decisions have been made about the outcomes of the review". The results are expected to be released in Q4 this year.

Gina Miller, founding partner of investment manager SCM Direct, said: "Whilst we do not believe in fee caps, as they still allow fund managers to fudge fees, the tone of this announcement in the Sunday Times yesterday is a total disgrace and signals yet another FCA whitewash.

"For a proper functioning free market there needs to be complete transparency of all fees in one Total Cost of Investing number, calculated in a mandated format to allow investors the ability to compare.

"It was earlier this year, that the same FCA let off the bankers, by abandoning its inquiry into banking culture. Now it seems the FCA is to let off the UK asset management industry despite this industry having fleeced the public for decades."

A wholesale sector competition review in 2014 indicated there might be competition issues in asset management. In particular:

- the difficulty investors have in making sure they are getting value for money and in monitoring the performance of asset managers;
- the role of investment consultants and potential conflicts of interest arising from the provision of advice and asset management services
- the incentives and ability of asset managers to control costs incurred on behalf of investors; and
- the bundling of ancillary services and the quality of some of the services provided.

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.