Investment Management Update
The FCA has published Policy Statement 18/8, focusing on the duties of fund managers and including final rules and guidance following previous consultation. The final rules and guidance cover:
- a requirement for fund managers to make an annual assessment of value, as part of their duty to act in the best interests of the investors in their funds.
- a requirement for fund managers to appoint a minimum of two independent directors to their boards.
- the introduction of a new prescribed responsibility under the Senior Managers and Certification Regime to bring individual focus and accountability.
- technical changes to improve fairness around the way in which fund managers make "box profits" from investors buying and selling their funds and to facilitate the movement of investors into cheaper share classes.
Firms have until 1 April 2019 to implement the rules related to box profits and until 30 September 2019 to implement the rules on assessment of value and appointment of independent directors.
To address its concerns that investors do not find it easy to choose which fund is right for them, the FCA has also published Consultation Paper 18/9 on remedies related to funds providing better information about what they are offering. This includes proposals on:
- how fund objectives can be expressed more clearly and be more useful to investors.
- making it clearer when funds are benchmark-constrained, or limited in how far their holdings can differ from the weightings of a benchmark index.
- ensuring that where a fund uses one or more benchmarks, this is disclosed consistently and explained to investors.
Lastly, the FCA has also published Occasional Paper 32 setting out the results of behavioural research which looked at how different ways of presenting information about charges affected investors’ decision-making and their understanding and awareness of charges.