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FCA spends over £1m on asset management study

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The FCA has so far spent over £1m carrying out its study into competition in asset management.

Following a Freedom of Information request submitted by Money Marketing, the FCA said the total costs of the market study stand at £1,000,370.

The costs cover the period between 19 November 2015, when the study was launched, to 19 July 2016, when the information was compiled.

The FCA set out the terms of reference for the asset management review last year, which is aiming to establish whether competition is working in the fund manager industry and whether investors are getting value for money.

The figure covers analysis of industry responses to the terms of reference, stakeholder engagement such as hosting roundtables and bilateral meetings, research, data collection, data analysis and governance.

The regulator could not provide a breakdown for the costs involved for each task.

The FCA says: “The asset management market study is a key piece of work for the FCA and has involved input by departments across the FCA.

“The aim of this study is to understand whether there are any areas where competition could work more effectively for asset management products and services.

“We will publish an interim report later this year which will set out our provisional findings, including a discussion of any possible remedies which we identify.”

The final report is due next year, after the interim report was pushed from the summer to the end of the year.

The FCA is planning to include a review of absolute return funds in its study amid poor performance and the flood of money into the funds in recent years.

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. What makes me really angry is the fact they can, and they do….

    I mean £1 million is but a drop in the ocean to the FCA but at the end of the day its a study ! for Christs sake;

    I wish, I just had spare money to invest in my company there are lots to try and lots of needs, but on a day when my fees and levies has just landed on the door mat……

    I am really fed up and seem forever increasing fees to my clients, to pay for this money wasting (by and large) monster !

  2. No Cost:Benefits analysis, I presume, to establish whether or not the considerable resources allocated to this study are likely to yield anything in the way of quantifiable and tangible benefits? Is the outcome likely to be worth the expenditure of £1m of OPM? It may be, but does anyone know or is it just another of those grand projects with which the FCA is free to steam ahead without reference to any outside authority? At a time when more and more questions are being asked (in high places) about whether or not the FCA and its activities represent value for money, these would seem to be pertinent questions.

  3. This in effect is the regulator doing due diligence on fund managers. Odd isn’t it that they expect regulated firms to do this as a matter of course, yet they are unable to do it for themselves in house.

    Assessing value for money in this circumstance is not rocket science anyway. Does the fund make money for its clients? Yes- good. No – bad. Job done. If it makes money the charges become much less relevant.

  4. Yes, but excessive charges are likely to amplify the impact of periodic downturns and hamper recovery therefrom.

  5. Why does the FCA think it needs to do a study on how competition is working in the asset management area? Very simple economics will dictate this. The funds repeatedly get more business added to them over a 5 year period? If yes the fund continues, if not, it won’t. As Harry says, if it makes money of its clients then its a good thing. The FCA keep telling the public they are not a price regulator, so why are they trying to determine if a fund gives value for money? What business is it of theirs if the fund is cheap or expensive if they are not a price regulator? What are they going to use a yard stick to determine value for money? Or even define VFM? The AMC??? TER???? Our regulator wouldn’t know value for money, if it came up and slapped it in the face to introduce itself. If a fund has TER of 3.7%pa but has consistently added say 12.8% net more value to a portfolio over a given time scale than the sector average does that represent Value for money? Maybe they think that it is an expensive fund and if they only charged 1.7%pa the investor would be so much better off. That is true but then the TER pays for expertise that helped the fund achieve its much better than average performance. There are always going to good periods and bad periods for all funds. Its is virtually impossible to ALWAYS be better than the average across all time scales so I will be very interested in how they spin this to show how “bad” the value for money is out there in the investment world.

  6. FOI requests – The new form of Journalism.

  7. “The regulator could not provide a breakdown for the costs involved for each task”.

    Go on then, I’ll do it:

    It was £370.00 for the study, on the back of a fag packet, and £1,000,000.00 for the lunches and expenses 🙂

  8. FOI requests-The only way to get some real information that may otherwise be logged never released or made public on “a good day to bury bad news” ………

  9. Craig M – that comment of yours really made me laugh!

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