Most were pretty positive about the spotlight thrown on fund managers’ fees and transparency. The People’s Trust’s Daniel Godfrey, the former chief executive of the Investment Association, described it as a “combination of sunlight and governance remedies” that will “make the industry more Darwinian in the interests of consumers”.
Martin Gilbert, the chief executive of Aberdeen Asset Management, said the review would “bring focus, and a sense of urgency, to confronting some key industry issues impacting customers”.
He added: “There is a need for increased transparency in relation to the services provided, the costs of such and also for ensuring value for money … the FCA’s suggested remedies will also help to strengthen confidence and competitiveness in the UK Asset Management industry, making it more attractive on the global stage by leading the way in best practice.”
Elsewhere in the industry, some felt the FCA had laboured mightily, and at great expense, to produce a flawed report. A regulatory expert at one fund manager said the review had come at the cost of “millions of pounds” on the industry but had just repeated “canards” about the average fund manager not outperforming after fees. The expert questioned the FCA’s analysis in some areas, and argued price clustering is already breaking down.
From the business consultants, who make their money advising fund managers how to go about making theirs, there was a greater focus on the challenges ahead.
Mike Walters, head of investment management regulation at KPMG, said the report posed a “fundamental challenge to active fund management”. He raised the prospect it could even lead to rationalisations in the industry: “I expect to see some consolidation of firms and funds as governance committees, intermediaries and investors increasingly question the level of fees relative to fund performance.”
Simon Turner, a partner in EY’s wealth and asset management practice, said: “Today’s interim findings from the regulator show that the spotlight is on the asset management sector … there are likely to be significant cost implications on asset managers to address the proposed remedies.”
Andrew Glessing, head of regulation at Alpha FMC, a wealth and asset management consultancy, said: “The interim findings herald a big shake up for asset managers. For the first time the regulator has laid out its expectations of the sector and is challenging the fundamentals of the asset management model in a way not seen before, in its aim to see greater value delivered to the end investor.”
Others were far more sanguine. David McCann, an analyst at Numis Securities, put a note out this morning saying asset managers would be “breathing a sigh of relief” and “may feel they have got away with it” as “it could have looked far worse in our view”. He pointed out that the notion of capping fund fees was nowhere to be found.
And that view seemed to be reflected in market reaction, with the share prices of leading listed UK fund managers untroubled by the report. As of 11:56 GMT, shares in Schroders were down 0.14% to 2,106p; Aberdeen Asset Management were up 0.35% to 289p, Henderson Group had risen 1.1% to 245.1p and Jupiter Asset Management fell 1.1% to 442p.