Asset managers up and down the land meanwhile, no doubt breathed a sigh of relief as the conclusions of the regulator’s two-year study were announced on Wednesday.
As Daniel Godfrey, founder of The People’s Trust, said: “Investment managers will be relieved today. The FCA has delivered a report which spares them the harshest potential remedies flagged in their interim report last November.”
Starting over with a blank sheet of paper and implementing drastic reform would have been a risky move by the watchdog. Had the FCA gone too far in its proposals, the UK asset management industry could have been left vulnerable to international competitors, especially in the pre-Brexit environment.
But Ryan Hughes, head of fund selection at AJ Bell, believes the asset management industry is “ripe for reform” because of the high proportion of active funds delivering poor value.
He said while it is clear the regulator is focused on tipping the balance back towards the consumer, there is still hundreds of billions of pounds stagnating in poor performing funds and too many examples of fund groups making huge profits, while delivering poor returns.
“The key now is in the implementation,” he added. “An awful lot of what has been announced today by the FCA is still up for further consultation, so there is going to be little immediate change.
“So, while today’s paper is encouraging, the key now is how long the additional consultations take and how quickly the proposed reforms are enforced.”
