The U.K. Financial Conduct Authority in 2016 will examine the value proposition of money managers, as well as the effect of investment consultants on institutional money management.
The FCA said its market study on competition in the money management industry will focus on both institutional and retail investors, looking at how money managers compete to deliver value to clients.
It also will consider whether money managers are motivated and able to control costs throughout its investment processes, and will look at whether barriers to innovation and technological advances in money management exist.
The watchdog will approach market participants for information and data, and will hold round tables and meetings. Interim findings, outlining any areas of concern and how to address them, are set for publication next summer, with a final report due in early 2017.
Should the FCA conclude competition is not effective, “we may intervene to promote effective competition,” said a statement on the FCA’s website. The watchdog may make rules, introduce firm-specific “remedies or enforcement action,” publish general guidance or propose enhanced self-regulation by the industry.
“The U.K. is a world leader in asset management,” said Christopher Woolard, director of strategy and competition at the FCA, in a statement. “Our market study aims to ensure that both retail and institutional investors can get value for money when purchasing these services — which we expect to further strengthen the U.K.’s position as a major center for asset management.”
The U.K.’s money management industry runs around £6.6 trillion ($10.05 trillion), of which about £2.1 trillion managed on behalf of pension funds. About £1 trillion is invested in non-mainstream money management products, and £1 trillion in insurance products, which the FCA said both include pension fund investments.
The study follows comments received as part of the FCA’s wholesale sector competition review, published in February, which the FCA said raised a number of questions about competition in money management.