The UK’s Financial Conduct Authority has set out the areas of focus for its study of competition in the asset management industry, with the role of consultants and motivation for cost control featuring.
The study will asses the way that asset managers compete to deliver value; whether they're motivate, or able, to control costs across the whole value chain; and the effect that consultants have on competition for institutional asset management.
Considering both institutional and retail asset managers, the FCA will also assess whether there are any barriers to innovation or technological advancement in the industry.
The study is intended to address potential issues, including the difficulty for investors to understand whether they’re getting value for money, and to monitor the performance of their manager.
It will also look in to conflicts of interest for investment consultants, and the ability for asset managers to control the costs incurred by investors – and their incentives for doing so.
Christopher Woolard, director of strategy and competition at the FCA, said: “Asset managers provide an important economic function, bringing together those with money to invest and companies and governments that need capital. Given the significant role they play in the economy, it is essential that competition works effectively for these services.”
“The UK is a world leader in asset management. Our market study aims to ensure that both retail and institutional investors can get value for money when purchasing these services – which we expect to further strengthen the UK’s position as a major centre for asset management.”
The FCA is now preparing to approach market participants in order to collect the required information, and intends to publish interim findings in summer 2016, before a final report in early 2017.
Initially, the interim report will highlight areas of concern and how the FCA intends to address them, as well as pointing to areas where no issues, or very few issues, have been found.
