FCA finds that firms are not meeting investors’ expectations

AdvisorThe Financial Conduct Authority (FCA) has underlined the importance of asset managers meeting investors’ expectations, after identifying examples of unclear product descriptions and inadequate governance and oversight in the industry.

The FCA highlighted several areas of concern. Certain firms did not provide a clear explanation of how they were managed; for example, some failed to disclose a constrained investment strategy, and one included jargon ordinary investors would be unlikely to understand.

The FCA also found that some funds were not being managed in accordance with their stated investment policies. It found this was particularly the case with funds that were no longer marketed to consumers, but still available through third party platforms.

The FCA will provide individual feedback to all the firms assessed in its review. Firms found not to be effectively managing risks will be required to make improvements to their practices. It expects to publish its interim report on the asset management industry this summer.

The UK fund industry is Europe’s largest, managing over £6 trillion (€7.4 trillion) of assets.

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