The standards set for asset managers go beyond what was previously expected of them as the problems found in the asset management industry have become far more complex and now evolve around business integrity, the Financial Conduct Authority has said.
In a speech given by FCA chief executive Martin Wheatley at the CFA European investment conference today (14 November), he admitted that standards expected go beyond the “relatively limited regulation of the past”, which focused on setting boundaries and ensuring clients’ money was safe and secure.
He said: “It is not just about old problems, such as mis-selling, misleading financial reporting and market fraud. Complex and less easy to untangle issues such as dealing commission, transparency, fund governance and corporate access have emerged.”
He pointed out that the world’s asset management markets now manage assets of over £5 trillion, nearly three times GDP in 2012, adding that “business integrity is now imperative for retaining investors”.
A large proportion of the money under management is ultimately the savings and pensions of ordinary people around the world and should be treated with “the same care as if it were our own”, Mr Wheatley added.
He said: “So the key question then becomes, is this happening? Are client interests front and centre? Or is there more we can do – collectively – to restore that trust link with investors?
“We argue that there is enough ambiguity in the evidence to suggest there is significant scope to move things forward.
“But it is also clear that some firms are not taking their responsibility to clients as seriously as they could – with evidence of poor transparency and accountability in spending commissions charged to customers. As well as issues over firms pushing the definition of research – such as using client commission to pay for corporate access.
“So the conversation has shifted from debating whether something should be done, to focusing on what can be done.”
