Sun. Aug 9th, 2020

Planet Compliance

Innovation & Regulation in Finance

FCA publishes review on meeting investors’ expectations

2 min read

The FCA today published its thematic review TR16/3: Meeting investors’ expectations. This report presents the findings of the FCA’s thematic review that considered how firms ensure they manage funds and segregated mandates as they say they will. The FCA also considered how firms monitor the appropriate distribution of their funds.

The findings will primarily be of interest to fund management firms. In addition, financial advisers and platform providers will find the review relevant to them. Consumer groups and trade bodies will also be interested in the themes explored in this report.

With this report the FCA hopes to achieve that fund management firms:

  • ensure that product descriptions are clear and correct because investors and financial advisers decide whether to invest in authorised investment funds based on this information
  • provide effective governance and oversight throughout the whole of a fund’s life, including funds that are no longer actively marketed
  • identify trends that may indicate inappropriate sales by monitoring the distribution channels they select as part of their responsibilities as product providers

All fund management firms should consider the findings in this paper and review their arrangements accordingly. Distributors should consider their responsibilities in light of our findings.

Senior management and those involved in fund governance should consider whether any of the issues we raise in this report are reflected within their own firm’s operations and take any action necessary to minimise the risk of poor outcomes to customers.

The FCA will shortly be writing to all the firms in our thematic sample to provide individual feedback. Where fund management firms did not effectively manage the risks that could lead to poor customer outcomes, the regulator will require them to make improvements to their practices. For the most significant issues, the FCA is already requiring them to be addressed.

It will follow up on this thematic review through our routine supervision work. The FCA statement and the report are available here.

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