Focusing on charges levied by managers on investors and the drivers behind them, the industry watchdog announced its intention to conduct a market study over the financial year.
Newly-authorised UK funds and segregated mandates will also be examined to determine whether they are in compliance with FCA rules on marketing, disclosure and investment directives, alongside a review of manager responsibilities, such as risk management.
“Asset managers may welcome the FCA taking a more consistent, collective view on markets, but will want to ensure that the FCA continues to recognise the value the asset management industry brings to the UK and how they differ from other firms in the financial services sector,” said Amanda Rowland, financial services risk and regulation partner at PricewaterhouseCoopers.
“The FCA has announced it will conduct a thematic post authorisation review of funds later this year and a competition review of asset managers. The FCA is likely to focus on whether funds are performing in line with how they were sold to investors. This review could, for example, focus on funds sold with a specific target or absolute return objective and identify whether they return what was promised to investors.”
The FCA also outlined its intention to scrutinise the sales practices of pension providers and certify that they are in-line with the 2014 changes to annuities.
The regulator will also be examining firms’ actions in advising consumers on making appropriate decisions when it comes to selecting their pension option, as relevant to the reforms coming into effect in April.
Pension concerns
In a statement published in the business plan, the FCA voiced its concern that a broadening range of pension products – while having the capacity to improve the marketplace – may also carry increased risk to consumers.
It said: “We are mindful of the risks that may flow from innovation and a market place that has yet to reach maturity in terms of the range of products and services available. We will monitor this closely over the coming year and beyond.
“There is a further risk that, without appropriate information and guidance to empower consumers, greater choice and the offering of more complex products in the pensions market will reduce consumers’ confidence and appetite to shop around and so weaken competitive pressure on providers to offer good value in this market.”
In the supervisory arm, Tracey McDermott will oversee regulation of investment, wholesale and specialists, with Linda Woodall heading up the retail and authorisations division as acting director.
