By Huw Jones and Simon Jessop
Asset managers must assess each year how much value for money they offer investors, Britain’s markets watchdog said, but stopping short of tougher measures called for by critics of the £8tn (€9.1tn) industry.
The Financial Conduct Authority said asset managers would have 18 months to prepare for a requirement from September 2019 to make an annual assessment of value, as part of their duty to act in the best interests of investors.
In a requirement that will take effect six months later than indicated, asset managers will have to publish value assessments and show if any corrective action was taken if charges were identified as not being justified.
After pressure from industry, the value for money idea has been broadened to overall value to avoid what the authority says is too much focus on costs.
There is no common template for managers to assess value, they are only asked to spell out the factors taken into consideration such as the range and quality of services provided and the performance of the fund after deduction of all payments.
Fund managers will also have to appoint at least two independent directors by September 2019.
Shares in leading asset managers yesterday outpaced gains in the market, with Schroders and Standard Life Aberdeen both up.
The sector’s main UK trade body the Investment Association welcomed recognition by the FCA that investors judge asset managers by performance and service, as well as cost. But Gina Miller, at SCM Direct, said it was shocking how long it had taken the FCA to merely “restate the obvious” without tackling “misleading fees.”