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FCA chief: Fees must give managers ‘sensible incentives’

FCA chief Andrew Bailey

FCA chief executive Andrew Bailey has used a speech at The Investment Association’s annual dinner to explain the regulator’s plans to make sure fees result in “sensible incentives” for fund managers.

The regulator has put value for money in the spotlight with its Asset Management Market Study. The measures consulted on include getting more independent oversight on boards to assess value for money and new templates to improve the clarity of fees and disclosure.

Bailey told the dinner that the FCA wanted to continue discussing value for money with the industry, but avoid introducing any new charging structures that would reward short-term thinking, for example.

Bailey said: “I think this should be part of ensuring that fee structures contain sensible incentives for managers.

“We see that there are big changes already happening in the world of fees, and now seems like the correct time to make sure what emerges in sensible and fit for purpose.  But we do recognise the challenges and where more work is needed. We have further work under way on disclosure templates for institutional investors, for instance. And we want to continue the dialogue on value for money, and on what questions we should all be asking to assess whether what’s being delivered does represent good value. We do not, for instance, want to incentivise short termism or fail to recognise the value of effective stewardship.”

Bailey also drew on the potential impact of Brexit on fund managers. While he described the process as “a challenge”, he said that asset managers would not necessarily emerge weaker from leaving the European Union.

He said: “It is important that we are very robust in supporting what works today, and in doing so rejecting the case that Brexit must mean a weaker European investment management sector because there is a failure of the imagination required to preserve and develop what works today.”


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