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FCA: fund reform about more than just value for money

FCA: fund reform about more than just value for money

The Financial Conduct Authority (FCA) has rejected claims it is trying to use the asset management study to make the investor experience all about price.

Speaking at a Transparency Task Force event in London, FCA director of competition Mary Starks said she disagreed with a claim that it was overly focussed on charges.

‘There has been a lot of debate in the context of the asset management market study about whether we are just trying to make everything about price and downplay other areas, and we are not at all.’

Starks highlighted behavioural research published alongside an asset management market study earlier in April, showing investors can be made more conscious of price without it changing their priorities.

‘[The research] looked into how the disclosure of fees and charges affects investor decision-making. This is in the context of quite a lot of rules specifying that charges must be made clearer to investors. We wanted to understand in more details how that actually works.

‘We found these disclosures did sharpen the focus on cost without actually altering the preferences.

'So if performance was the most important thing [to the client], followed by quality of service followed by cost, even after these disclosures those factors would still be ranked in that order,’ said Starks.

She said it was interesting you can ‘sharpen the focus on price without losing anything else.’

As a follow-up to the asset management market study, Starks explained, the FCA is consulting on a package of rules designed to give better clarity to investors about fees and charging as well as more clarity on what the fees are for.

Starks said the study was carried out to protect investors whose savings need to work harder now to generate income in retirement but who are using an asset management market which, in some areas, shows weak competition on pricing.

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