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FCA sheds light on thematic review into fund charges

The Financial Conduct Authority has provided more details on its thematic review of fund charges. 

The regulator has now revealed that it will write to 11 asset management firms to enquire about the structure of their fund charges.

With support from the Investment Management Association, the regulator wants to examine the charges and determine how they are broken down and overseen.

An FCA spokesman says: “We are using this spread [of asset management firms] to see how this works. 

“We understand the upfront charges but want to look at the extra charges.

“We will start the review this week and will be finished by the end of the year.”

IMA chief executive Daniel Godfrey, who has been campaigning for unit-by-unit cost breakdowns for funds, says: “The IMA and its members are pleased that the FCA is seeking to ensure it has a comprehensive understanding of the way fund managers operate.”

Chelsea Financial Services managing director Darius McDermott says: “The pressure on fees is well known. Not a day goes by without it being discussed. 

“In aggregate, I think charges will go down but fund managers need to charge for active management and have some form of profit. We need to be careful that fund managers are not pushed to the point where they cannot retain good talent.”

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