RegulationSep 12 2016

FCA: fund manager fee cap not ruled out

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FCA: fund manager fee cap not ruled out

The FCA has yet to make a decision on whether it will place a cap on fund manager fees, despite reports it has ruled out the move.

A spokesperson for the regulator told FTAdviser no measures have been taken off the table as it undertakes its review of the fund management industry, which it began in November 2015.

The asset management market study is investigating whether competition is working effectively in the sector to enable investors to get value for money when purchasing its services.

As part of our market study the FCA is seeking to understand how asset managers compete to deliver value, and whether asset managers are willing and able to control costs and quality along the value chain.

The regulator noted in its terms of reference for the study that fund manager fees appear to have clustered around the 1.5 percentage point mark on an unbundled basis.

Numis analyst David McCann said he expected the study to heap further pricing pressure on asset managers.

The FCA has always maintained it is not a price regulator. However in May, working with the Department for Work and Pensions, it introduced a cap on personal pension exit fees of 1 per cent.

The FCA intends to publish its interim report from the review - which is also looking at how investment consultants affect competition for institutional asset management - in the last quarter of 2016 and its final report in early 2017.

The interim report will set out those areas which the FCA considers raise concerns and those in which it have found few or no problems.

If it concludes competition is not working well, it has stated it may intervene to promote effective competition.

It can do this through rule-making, introducing firm specific remedies or enforcement action, publishing general guidance or proposing enhanced industry self-regulation.

laura.miller@ft.com