Jacqui Hughes, Head of Wealth & Asset Management Regulation, KPMG UK, comments on today’s statement from the FCA
Jacqui Hughes, Head of Wealth & Asset Management Regulation, KPMG UK, comments on today’s statement from the FCA setting out next steps to improve competition in the UK’s asset management industry:
“Full costs and charges absolutely have to be managed and disclosed, the debate is around how best to do that and questions still remain after the FCA’s statement today.
“An opportunity has been missed to make a significant improvement to investors’ value for money immediately. The regulator has fallen short of introducing an end-date for trail commission to advisers, even though one was imposed on platforms. Also, managers will not be required to switch investors into the best value share classes. The rationale given is to protect customer choice, but investors may not be aware how much they are paying. Managers are reliant on getting investors’ consent, unless the fund prospectus allows otherwise. In practice, the new guidance may mean little change.
“While the search for meaningful disclosures continues, managers must provide the PRIP KID figures. But there are serious questions being raised about both the methodologies and the presentation of the KID. For example, the initial cost of investing is spread over the investment period, so investors can’t actually tell what they’re paying upfront.
“The FCA has prescribed that firms appoint someone with direct responsibility for demonstrating value, deciding who does that role will be a real challenge for many firms. SMCR will come in at roughly the same time and given the efforts being made to ensure SMCR embeds cultural change in the day-to-day workings of the business, appointing someone within the firm would seem logical. However, there are a lot of benefits to be gained from having an independent director responsible for checking and challenging progress.”
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