Final rules published on Thursday by the U.K. Financial Conduct Authority (FCA) focus on the obligations of investment fund managers to ensure that they are acting on behalf of their investors.
The new rules are designed to enhance competition and ensure that investors are getting value for their money.
Among other things, the rules:
ensure that investors are switched into cheaper versions of firms’ funds;
improve fairness in how managers profit from investors buying and selling their funds; and
require fund managers to make an annual assessment of value, as part of their duty to act in the best interests of their investors.
“These measures will deliver better protection for all investors, both those who are actively engaged with their investments and those who don’t follow their investments closely,” the FCA says.
The FCA has also launched a new consultation on proposed rules and guidance that are intended to enhance competition by improving the information that investors receive about investment funds.
These proposals are designed to address the U.K. regulator’s concerns that even actively engaged investors have a hard time comparing funds and shopping around.
“Today’s announcements are an important part of a package of measures that, combined, aim to achieve a fair, transparent, open and accountable market,” says Christopher Woolard, executive director of strategy and competition at the FCA, in a statement.
“The investment choices open to people, and the decisions they make on how to invest, can have a profound impact on their financial health. They can also have consequences for their families, as well as society as a whole. That’s why it is important the asset management industry, which looks after the savings of millions of investors, is working as well as possible,” Woolard says. “But our market study found evidence of weak price competition in a number of areas.”