FCA investigates asset management

The Financial Conduct Authority has set out the areas it will focus on in a market study into competition in the asset management industry.

FCA investigates asset management

Over the next year the FCA will assess:

  • how asset managers compete to deliver value;
  • whether asset managers are motivated and able to control costs along the value chain; and,
  • what effect investment consultants have on competition for institutional asset management.

Christopher Woolard, director of strategy and competition at the FCA, said: “Asset managers provide an important economic function, bringing together those with money to invest and companies and governments that need capital.

“Given the significant role they play in the economy, it is essential that competition works effectively for these services. Our market study aims to ensure that both retail and institutional investors can get value for money when purchasing these services – which we expect to further strengthen the UK’s position as a major centre for asset management.”

The FCA announced its intention to undertake a market study into asset management in its 2015/16 business plan. This followed feedback received as part of the wholesale sector competition review in 2014 which 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.

The FCA was established with an operational objective to promote competition in the interests of consumers. It aims to publish interim findings on asset management in summer 2016 and a final report by the early 2017.

 

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