FCA looks to bring greater competitive pressure to bear on the asset management market

The Financial Conduct Authority (FCA) has published its final report into the asset management market. Frontier has advised clients on their response to the market study.

The asset management market looks after the savings and pensions of many millions of people in the UK. In an interim report, the FCA outlined a number of issues in the market including weak price competition in some areas, evidence of high and sustained profits, a lack of clarity on the objectives of many funds, and performance not always being reported against appropriate benchmarks.

Today’s publication outlines the remedies the FCA is seeking to implement. One set of remedies focuses on changing the way fund managers operate, including a new duty of care to their customers and a requirement to have at least two independent non-executive directors on their boards. A second set looks to improve competition in the market by, among other things, raising transparency for investors on the fees that they pay.

A third set of remedies looks to shake-up the market for intermediary services. To that end the FCA also intends to launch a new market study into investment platforms and has outlined its intentions to make a market investigation reference to the Competition and Markets Authority regarding the institutional advice market.

Paul Cullum from Frontier said “The FCA will be looking at how investment platforms compete to win and retain customers and whether they enable customers to access value for money products. In doing this we expect them to look at the industry structure, common practices within it, and how customers engage in the market and use the platforms.  As in other recent inquiries, understanding the subtleties of customer behaviour may be very important in addressing any concerns that are identified.”

For more information, please contact Saskia Nett on s.nett@frontier-economics.com, or call +44 (0)20 7031 7000.

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