Invesco Perpetual’s £18.6m fine is the clearest sign yet that a shift in regulatory focus from investment distributors to manufacturers is taking place in the UK, experts have said.
Intermediaries faced a number of years in the spotlight as the previous regulator, the FSA, hammered out its RDR clampdown on commission practices, adviser qualifications and fee transparency before implementing it at the start of 2013.
All areas of the distribution chain have now been forced to accept changes in pay practices, including advised and execution-only platforms.
Mark Spiers, Bovill’s head of wealth management, said: “For a long time, the FCA focused on distribution, but now it is moving up the value chain and getting to the big asset managers. It is looking for poor practice and conflicts of interest.”
Rory Gage, director at Grant Thornton, said there has been a “huge increase” in the attention paid by the FCA to investment products.
“The FCA... is much more focused on the risk to the end-investor,” he said.
“We are going to see it focus on whether people understand products. Conduct risk is going to play a bigger and bigger part in the industry.”
Invesco Perpetual was hit with the fine for a series of trading and compliance breaches on 15 of its funds between 2008 and 2012.
Its breaches included exceeding the Ucits investing limits on products such as the flagship Income and High Income funds. It also failed to disclose that certain derivative investments were increasing clients’ risk, and failed to properly record certain bond trades.
The FCA said the group has now rectified the problems with its systems. Invesco has also compensated clients who suffered loss due to the Ucits breaches to the tune of £5.3m.