In 2017, the FCA published its Asset Management Market Study, which found evidence of weak demand-side pressure on fund prices, resulting in uncompetitive outcomes for investors in authorised funds. Since then, the FCA has worked closely with industry to encourage a greater focus on assessment of value, to drive improved value for money for investors.

Today’s findings show that many firms have now fully integrated considerations on assessment of value into their product development and fund governance processes. This greater focus has also driven changes in fees and charges, resulting in savings of costs to consumers amounting to millions of pounds.

However, there remain outliers, where action needs to be taken. This is particularly important with the Consumer Duty which came into force on 31 July, where firms are expected to deliver fair value for retail consumers.

Camille Blackburn, Director of Wholesale Buy-Side at the FCA, said:

"Authorised fund manager boards and senior managers are responsible for ensuring value assessments are carried out properly and any issues found are resolved quickly.

"It is vital that firms make sure they are not solely focused on a fund’s profitability over value for money for investors. The Consumer Duty, which is now in place, further supports our expectations in this area."

What the review found:

• Examples of good practice include moving investors to clean share classes with no trail commission or cutting funds’ fees.

• Some firms’ independent non-executive directors did not provide sufficient challenge, with some accepting information provided to Boards at face value without probing further.

• Significant differences between good and poor practice in how AFMs assess their funds’ performance.

• Firms putting too much emphasis on comparable market rates to justify their fees, rather than conducting an assessment using the full range of value assessment considerations.

• Some firms now have better processes for allocating costs but are reaching conclusions on AFM Costs and Economies of Scale that don’t take into account the information made available by that better process.

The FCA expects firms to consider these findings and to make improvements where required.