UK asset management faces shake-up

Author: Amélie Labbé | Published: 2 Dec 2016

The UK investment management sector looks set for an extensive reorganisation after a Financial Conduct (FCA) report highlighted several issues with fund management and performance.

The regulator’s criticism comes on the back of a year-long review into the £6.9 trillion ($16.8 billion) industry. Significantly, it found that while a large proportion of so-called actively managed funds did not beat their benchmark and benefited from 'sustained high profits’, the costs passed on to investors have not dropped in over ten years. In comparison, charges associated with so-called passive funds, which follow the market’s movements, have gone down significantly over the same timeframe.

The FCA also raised concerns surrounding a lack of transparency in the sector, putting forward the argument that the market was not necessarily working in the best interests of investors. Significantly, complex and often difficult to understand fund and product documentation, coupled with obscure...