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Extending the FCA’s governance proposals to other investment products – no action on investment trusts, further work on with-profits and unit-linked products and pensions

Extending the FCA’s governance proposals to other investment products – no action on investment trusts, further work on with-profits and unit-linked products and pensions

  • United Kingdom
  • Financial services and markets regulation
  • Financial institutions

05-04-2018

Published on 5 April 2018, Policy Statement (PS18/8)Asset Management Market Study remedies and changes to the handbook – Feedback and final rules to CP17/18” sets out the FCA’s position on the issues which have been well discussed in the industry since the Final Report was released last year.

Also published on 5 April, the FCA published Consultation Paper (CP18/9)Consultation on further remedies – Asset Management Market Study” setting out proposed rules intended to improve fund disclosures for consultation. These proposed rules focus on: fund objectives and investment policies; the use of benchmarks; and the calculation of performance fees.

In CP17/18 the FCA asked for views on extending its governance proposals for the authorised funds market to other investment products, specifically to investment trusts and other closed-ended investment companies as well as unit-linked and with-profits insurance products.

Investment trusts

The FCA has now confirmed that it does not plan any immediate action on investment trusts and other closed ended investment companies but is keeping the possibility of further changes to their governance arrangements and of subjecting them to the remedies in CP18/9 under review.

The FCA’s proposed guidance in CP18/9 on how the FCA expects funds to make their objectives more useful to investors only applies to authorised funds at this stage.

With-profits and unit-linked products

The FCA has planned diagnostic work into with-profits and unit-linked products that will improve its view of any harm that exists in these markets. The FCA expects to reach a view on whether further intervention is required in the first half of 2019.

Pensions

The FCA is not bringing forward proposals on extending the governance proposals to pensions at this time but will instead consider this as part of its work on non-workplace pensions. The FCA is recommending that the Department for Work and Pensions removes barriers to pension scheme consolidation and pooling.

Fund Managers as Agents

As part of PS18/8 the FCA has confirmed a package of measures which the FCA describes as strengthening the duty on authorised fund managers to act as good agents for their underlying investors. This appears to be a regulatory rather than a legal concept and the boundary between legal and regulatory duties here remain to be fully worked out.

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