FCA launches review into asset management competition

In addition, the FCA will look at whether there are any barriers to innovation and/or technological advances in asset management.

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 UK is Europe’s largest asset management market, with around £6.6 trillion invested. This includes around £2.1 trillion of pension fund investments, £1.2 trillion in retail investment products and £0.4 trillion in public sector and charity investments. There is a further £1 trillion investment in insurance products and £1 trillion invested in non-mainstream asset management products – both of which will include pension fund investments.

A wholesale sector competition review in 2014 indicated there might be competition issues in asset management. In particular:

- the difficulty investors have in making sure they are getting value for money and in monitoring the performance of asset managers;
- the role of investment consultants and potential conflicts of interest arising from the provision of advice and asset management services
- the incentives and ability of asset managers to control costs incurred on behalf of investors; and
- the bundling of ancillary services and the quality of some of the services provided.