Calls for FCA to allow implementation time for new rules

Industry insiders have called on the UK’s Financial Conduct Authority (FCA) to give the funds industry “sufficient time” to implement recommendations that it will make tomorrow, when it publishes its long-awaited final report into the asset management industry.

The report is expected to focus on stimulating price competition in the funds industry through improving transparency of firms’ costs and charges.

However, there are also fears that the FCA could refer the industry to the UK’s Competition and Markets Authority, triggering a full scale probe into competition within the industry.

Richard Taylor, compliance director at T. Bailey Fund Services, said he backed the FCA’s intentions to ensure investors achieve good value, but “identifying a framework across all product types” will be a “real challenge”.

“The proposed framework for assessing and evidencing value must be easy for both managers and clients to understand, protected from manipulation and misinterpretation, and free from over-complex additional cost disclosures if it is to be effective.

“We hope that the final report recognises that any additional disclosures produced by product providers will only be effective if investors read and understand the additional fund documentation provided and are able to compare it with similar information produced by other providers.

Ian Manson of Duff & Phelps, a consultancy, said that the report “presents the ideal opportunity for the FCA to promote effective competition within the industry”.

“The final report is likely aim to improve the oversight of fund managers’ costs and charges by fund governance bodies,” he said.

However, Manson pointed out that the introduction of two major pieces of regulation affecting the asset management industry, known as MiFID II and Pripps, next year will in any case increase transparency of costs and charges. This, according to Manson, meant that “authorising fund governance bodies to consider value-for-money issues, without fundamentally restructuring existing fund governance arrangements” would be a proportionate measure by the FCA.

©2017 funds europe

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