The Financial Conduct Authority (FCA) has now published its long
awaited Interim Report on its Asset Management Study.
Its headline conclusion at this stage is that there is weak
competition in a number of areas of the industry and this is having
a material impact on investor returns. The regulator has
provisionally proposed a number of remedies, with significant (but
perhaps unsurprising) emphasis on increased transparency, cost
certainty, asset manager accountability and switching. The FCA has
highlighted various factors which, in its view, evidence weak
competition and poor investor outcomes.
One such factor is the limited price competition in fund
charges. While there is some evidence of price competition in the
charges applicable to passive funds, this is not the case in
actively managed fund charges. Indeed it would appear that actively
managed fund charges have been broadly static for the last ten
years, with 'most' asset management firms believing
