Assessing the value that investment funds deliver to investors

The FCA’s new rules require UK authorised fund managers (AFMs) to assess the overall value their funds deliver to investors. A summary of these assessments must be published annually, with the first publications due in January 2020. Where a fund is not providing value for money, AFMs must explain what action they are taking to address this.

This is important for the UK’s asset management industry because:

• This is the first time AFMs will have to justify their pricing and consumer outcomes publicly, so producing a credible assessment will be crucial from both a reputational and a regulatory perspective.
• The FCA is introducing individual accountability for a firm’s assessment of value, under the Senior Managers and Certification Regime – the first time it has done this in any sector.
• AFMs will need to consider their pricing model for each element of their service, possibly to a much greater level of detail and rigour than before.

Assessing value for money will be challenging due to the subjective nature of what constitutes good value, the specificities of each fund and limitations in the data available. In this report, we explore these challenges and outline how firms can best respond.

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