Fund managers will have to provide more information on the way their funds are run, the FCA has announced today.
The regulator published new rules and guidance to improve the quality of information available to investors in response to its asset management market study last year.
The FCA says managers will now have to explain why or how their funds use particular benchmarks and reference them consistently across the fund’s documents. If managers do not use a benchmark, investors must be informed how to assess the performance of a fund. Past performance should also be measured against the benchmark.
Additionally, the regular has amended its rules to require that where a performance fee is specified in a prospectus, it must be calculated on the basis of the scheme’s performance after the deduction of all other fees.
Rules for benchmarks do not require managers to use one and those who do use one are not expected to refer to it if it is not relevant to the way the fund is run.
Rules for performance fees will come into force on 7 August, while benchmark declarations will be required from 7 May for new funds and 7 August for existing funds.
The FCA’s executive director of strategy and competition Christopher Woolard says: “We’re working to make competition work better in the asset management market and protect those least able to actively engage with their investments. Today’s remedies build on those we’ve already introduced and will make it easier for investors to choose the best fund for them and help them achieve their investment objectives.”
The FCA says the industry plays an “important role” in the UK’s economy as more than £1trn is managed for individual investors and £3trn on behalf of UK pension funds and other institutional investors.