He said the FCA’s Asset Management Study, published in June, was already resulting in “big changes” in the “world of fees.” He did not provide details but hinted there was more change ahead as the FCA pushes for an “all-in-one” fund fee and greater competition on fees among fund managers.
He said: “We want a dynamic, vibrant sector with an engaged customer base and firms competing effectively to deliver value for their customers. A key feature of vibrant, competitive markets is ease of entry for new participants.”
In his speech to the Investment Association Annual Dinner at Mansion House in London last night he said that the FCA was determined that fund fees should be more transparent and clear and incentives for managers should be “sensible.” He added that the FCA wanted to shake up the fund management sector and the new Asset Management Authorisation Hub would help promote innovation and competition by encouraging new entrants.
He told the audience of fund managers and fund experts: “In June we published the final (Asset Management Study) report. It contained significant proposals relating to giving protection to investors who are less able to find better value for money, remedies to increase competitive pressure, and proposals to improve the effectiveness of intermediaries including making a market investigation reference to the Competition and Markets Authority to investigate consultancy services.”
“We see that there are big changes already happening in the world of fees, and now seems like the correct time to make sure what emerges is sensible and fit for purpose. But we do recognise the challenges and where more work is needed.
“We have further work under way on disclosure templates for institutional investors, for instance. And we want to continue the dialogue on value for money, and on what questions we should all be asking to assess whether what's being delivered does represent good value. We do not, for instance, want to incentivise short termism or fail to recognise the value of effective stewardship.”
He said the investment management sector was becoming more important to the UK long term savings sector, particularly in the pensions market ‘decumulation’ phase, and the FCA was responding to this.
Turning to Brexit and other challenges he said that London could still prosper outside the EU and remain a home for asset management although there would be challenges.
He said: “The challenges are all around us, whether it is Brexit, long-term saving and retirement provision or adjusting to the pace of innovation. We can handle these challenges, I firmly believe that, but to do so we need to be very well anchored to the principles of open markets, strong competition and a willingness to embrace change.
“Brexit is, of course, a challenge. But it is important that we are very robust in supporting what works today, and in doing so rejecting the case that Brexit must mean a weaker European investment management sector because there is a failure of the imagination required to preserve and develop what works today.”