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Funds industry shouldn't be surprised at FCA charging probe
by Dylan Lobo on Oct 30, 2013 at 14:51
PwC said the Financial Conduct Authority (FCA) review into potential 'inherent conflicts' in fund pricing should come as no surprise to the industry.
The professional services giant made its comment on the back of news the city watchdog was launching a review into fund pricing, with particular focus on dealing commissions which it feels could be more transparent. FCA chief Martin Wheatley (pictured) described this a 'critical' period for the asset management industry.
'No-one in the asset management industry should be surprised at the FCA's focus on the use of dealing commissions,' PwC partner and head of asset management regulation Amanda Rowland said.
Rowland expects the news to cause tremors across the financial services industry as the regulator has cast its net wide in a bid to improve transparency.
'The FCA has extended its work to include banks and brokers as well as buy-side firms. Given these institutions have been less involved in the debate on dealing commissions to date, this is likely to cause a stir amongst some firms.'
She added: 'On fund charges, the FCA may focus less on transparency and more on the governance surrounding decision making. Firms will clearly be expected to have the same regard and controls around spending their clients money as when they spend their own.
Rowland welcomed the tone used by the FCA, especially the emphasis it placed on the importance of the asset management industry to the UK economy, describing the tone as a 'measured and proportionate' approach to supervision.
'Clearly collaboration is the new watchword and the focus on this rather than enforcement and adversarial tactics will be welcome,' Rowland said.
'Any firm that does not have appropriate processes in place to meet the FCA's expectations on customer care can expect little sympathy from the regulator.
'The customer's interests must be at the heart of decisions taken, and senior management and the sales teams are expected to be closely involved rather than compliance being left down to the control functions.'
BDO financial services partner Michelle Carroll believes this is an opportunity for the industry to improve its image.
'It’s important for the future success of the UK asset management market that we remove any doubt in investors’ minds about fees and ensure that investors generally have full confidence in the industry, Carroll said.
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