• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to secondary sidebar
  • Skip to footer
  • Subscribe
  • Twitter
  • RSS Feed

Investment News NZ

Investment News provides financial advisers news stories from the financial industry in New Zealand. Subscribe to our free weekly newsletter.

  • Home
  • News
  • Kiwisaver
  • Subscribe
  • About
  • Advertise
  • Contact
You are here: Home / Investment News / UK fund managers, consultants roughed up by regulator

UK fund managers, consultants roughed up by regulator

November 20, 2016

The UK financial regulator has gone to town on the country’s funds management industry calling for a raft of measures to reduce fees, improve disclosure and increase competition.

In a wide-sweeping report released last week, the Financial Conduct Authority (FCA) recommends stronger investor best interest requirements for fund managers as well as introducing an “all-in fee” disclosure standard.

“… we propose a package of remedies to boost competitive pressure for both retail and institutional investors and ensure a minimum level of protection for investors,” the interim FCA ‘Asset Management Market Study’ says. “This should also increase the efficiency of the asset management industry and its attractiveness to international and domestic investors.”

Investment consultants also copped a serve from the FCA with a side-bar study outlining plans to bring the highly-concentrated asset advisory business under its regulatory ambit and refer the industry to the UK Competition and Markets Authority (CMA).

According to the FCA report, the UK investment consultancy industry suffers from weak demand-side scrutiny, murky performance measures, conflicts of interest and lack of competition.

The FCA says just three providers – Aon Hewitt, Mercer and Willis Towers Watson – have dominated the UK asset consultancy industry for some time, accounting for about 60 per cent of the market.

Furthermore, the UK regulator found asset consultants were prone to recommending associated implemented solutions.

“One survey found that 58% of schemes currently select the fiduciary arm of their existing investment consultant or actuary as their fiduciary management provider,” the FCA investment consultant report says. “Moreover 75% of new mandates were awarded without a fully competitive tender in 2014, with investment consultants continuing to provide the majority of mandates.”

In its main report on the UK funds industry, the FCA says most active management fees have remained at high levels (average 0.9 per cent) while passive fees (average 0.15 per cent) have fallen in recent years. However, active managers in general have not outperformed passive funds after fees, the report says.

“We also note that as fund size increases, price does not fall, suggesting the economies of scale are captured by the fund manager rather than being passed onto investors in these funds,” the FCA says.

In general, the UK asset management industry has sustained high profits, generating average margins of 36 per cent over the six-year sample period reviewed by the regulator.

“These margins are even higher if the profit sharing element of staff remuneration is included,” the FCA says.

The report says about 1,840 UK funds managers collectively look after some £6.9 trillion of assets split between retail (£1 trillion), institutional (£3 trillion) and offshore investors (£2.7 trillion).

Both the main fund management proposals and investment consultancy CMA referral would be open for consultation until February 20 next year.

“We also propose further FCA work on the retail distribution of funds, particularly on the impact that financial advisers and platforms have on value for money,” the regulatory report says.

Print Friendly, PDF & Email
Twitter0
LinkedIn0
Google+0
Facebook0

Read More » Investment News

Recent articles

  • Chief exits Kiwi Wealth; Mosaic names ASB ops expert as partner; T Rowe Price keeps Australasia wholesale role in the family February 28, 2021
  • Revenge against the ombudspeople: complaints body zombie legal action walks on February 28, 2021
  • Simplicity into top 10 ESG fund share for Australasia… February 28, 2021
  • … as Milford, Hyperion top Morningstar awards February 28, 2021
  • Tough calls ahead for local fixed income managers February 28, 2021
  • Boutique buoyancy management: how Ark stays afloat with more on board February 28, 2021
  • Master trusts surpass $8bn ahead of AMP passive rebirth February 28, 2021
  • T+1 and counting: why US trading systems could reach unsettling speeds February 28, 2021
  • Nature calls: under-construction financial disclosure framework to go beyond climate February 28, 2021
Finished reading? Why not subscribe? To receive a weekly email enter your email address here.

Primary Sidebar

WEEKLY NEWSLETTER

Sign up here to receive our weekly newsletter.
Learn More »

Investment News

  • Chief exits Kiwi Wealth; Mosaic names ASB ops expert as partner; T Rowe Price keeps Australasia wholesale role in the family February 28, 2021
  • Revenge against the ombudspeople: complaints body zombie legal action walks on February 28, 2021
  • Simplicity into top 10 ESG fund share for Australasia… February 28, 2021
  • … as Milford, Hyperion top Morningstar awards February 28, 2021
  • Tough calls ahead for local fixed income managers February 28, 2021
  • Boutique buoyancy management: how Ark stays afloat with more on board February 28, 2021
  • Master trusts surpass $8bn ahead of AMP passive rebirth February 28, 2021
  • T+1 and counting: why US trading systems could reach unsettling speeds February 28, 2021
  • Nature calls: under-construction financial disclosure framework to go beyond climate February 28, 2021
  • Front-to-back outsourcing transforms funds management February 28, 2021

Search by Keyword

Most Recent Investment News

Chief exits Kiwi Wealth; Mosaic names ASB ops expert as partner; T Rowe Price keeps Australasia wholesale role in the family

February 28, 2021

Revenge against the ombudspeople: complaints body zombie legal action walks on

February 28, 2021

Simplicity into top 10 ESG fund share for Australasia…

February 28, 2021

… as Milford, Hyperion top Morningstar awards

February 28, 2021

Tough calls ahead for local fixed income managers

February 28, 2021

Investment News Archive

Most Popular Articles

  • NZ share-trading splurge could trigger tax alarms… posted on October 5, 2020
  • Westpac NZ flags retail advice sale to Forsyth Barr posted on October 19, 2020
  • Flint set to spark platform competition posted on August 17, 2020
  • The horror year in technicolour: free KiwiSaver 13 report released posted on September 30, 2020
  • Four to the core: Smartshares to expand, rearrange and reprice ETFs posted on June 22, 2020
  • Kitset KiwiSaver scheme set to unwrap in spring posted on April 27, 2020
  • NZ Funds directors back on board posted on April 24, 2016
  • Funds eye bargains, self-shoppers hoard cash, KiwiSavers turn conservative posted on March 15, 2020

Sponosored Content

David-Boyle

Jumping lessons: what all investors can learn from GameStop loss

What do ‘Kiwi’ experts see for 2021?

David-Boyle

On the industry play-list: four chart-topping regulations for 2021

David-Boyle

Charge of the lite (advice) brigade

Quick-links to Popular News

  • FAP Compliance
  • Coronavirus
  • New Appointments
  • Financial Markets Authority (FMA)
  • Kiwisaver
  • Climate Change
  • Crypto Currency
  • Blockchain
  • Insurance

Secondary Sidebar

Recent News

  • Chief exits Kiwi Wealth; Mosaic names ASB ops expert as partner; T Rowe Price keeps Australasia wholesale role in the family February 28, 2021
  • Revenge against the ombudspeople: complaints body zombie legal action walks on February 28, 2021
  • Simplicity into top 10 ESG fund share for Australasia… February 28, 2021
  • … as Milford, Hyperion top Morningstar awards February 28, 2021
  • Tough calls ahead for local fixed income managers February 28, 2021
  • Boutique buoyancy management: how Ark stays afloat with more on board February 28, 2021
  • Master trusts surpass $8bn ahead of AMP passive rebirth February 28, 2021
  • T+1 and counting: why US trading systems could reach unsettling speeds February 28, 2021
  • Nature calls: under-construction financial disclosure framework to go beyond climate February 28, 2021
  • Front-to-back outsourcing transforms funds management February 28, 2021

Footer

Copyright ©2020 InvestmentNews.co.nz — All Rights Reserved ·— Terms & Conditions