FCA asset management review could favour ETF providers

Nov 20th, 2015 | By | Category: ETF and Index News

ETF STRATEGY NEWS! ETF Strategy is delighted to announce the launch of ETF Strategy Hub (hub.etfstrategy.com), an on-demand repository of webcasts, videos, podcasts and white papers. Debuting with Special Series on Technology & Innovation in China and the Digital Economy.


The Financial Conduct Authority (FCA) has set out to assess if UK asset managers are delivering value in a market study which will be conducted in 2016.

FCA review: are investors getting value for money from their asset managers?

The FCA is set to review whether the UK’s £6.6tn asset management industry is delivering value to its clients.

The study will focus on how asset managers, servicing both retail and institutional investors, compete to deliver value and whether asset managers are motivated and able to control costs along the value chain.

Much like the Retail Distribution Review, which the FCA began in 2013, the study is likely to cast an unflattering light on some of high-fee arrangements present in the investment industry and should provide a further tailwind to the low-cost passive and exchange-traded funds industry.

The move follows feedback from a 2014 review which indicated there might be competition issues in the UK’s £6.6tn asset management industry. In particular: the difficulty investors have in making sure they are getting value for money and in monitoring the performance of asset managers; the incentives and ability of asset managers to control costs incurred on behalf of investors; and the bundling of ancillary services and the quality of some of the services provided.

The findings will indicate where the FCA has found any areas of concern and explain what they are and how it proposes to address these concerns.

Christopher Woolard, director of strategy and competition at the FCA, said: “The UK is a world leader in asset management. Our market study aims to ensure that both retail and institutional investors can get value for money when purchasing these services – which we expect to further strengthen the UK’s position as a major centre for asset management.

Vanguard, the low-cost asset manager and ETF provider, has welcomed the announcement. “Fees for asset management services still vary considerably in the UK financial services industry but we believe the FCA’s focus on ensuring end investors get value for money will help level the playing field, increase competition, enable greater innovation and improve choice,” said John James, Head of European business at  Vanguard.

he added: “This study will hopefully build on UK and international initiatives over recent years that have focused on increasing fees and costs transparency and removing conflicts of interest from the distribution chain.  

“A more competitive UK asset management industry has the potential to significantly improve the financial well-being of millions for the better. To make this happen, we believe the industry must commit to giving investors a fair deal and a better chance of investment success. Vanguard intends to actively participate in this review, sharing both its insight into the UK market, as well as its experience of other international markets.”

Tags: , , , , , ,

Leave a Comment