UK's Financial Conduct Authority report into asset management: guidance for future direction

By Marc Kemp
Banking Corporate Governance Financial Services Funds Risk & Compliance

In brief

Written by Partner Marc Kemp and Senior Regulatory Counsel Michael Mathieson

ASIC often looks to overseas regulators for inspiration. So when a particularly influential regulator publishes a comprehensive report about a large segment of its regulated population, including possible new areas for regulation, it can pay to take note because it may be a guide to the future direction of Australian regulation.

In November 2015, the UK's Financial Conduct Authority began a market study into asset management. In November 2016, the FCA published its interim report. After consulting on its interim findings and proposed remedies, the FCA published its final report on 28 June, in which it confirmed its interim findings about imperfect governance, lack of adequate price competition (particularly in the retail funds sector), cost opacity and inadequate communication of fund objectives and performance, and proposed a package of remedies.

Our alliance partner Linklaters has prepared a summary of the findings and announced remedies: see Summary and analysis of the FCA's Asset Management Market Study Final Report. Many of the remedies the FCA is considering would be familiar to ASIC and some segments of the Australian financial services industry but, as in the UK, would amount to far-reaching extensions of existing regulation. We have prepared a comparative summary for the Australian market.