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FCA extends transparency rules to delegated portfolio managers, alts fund managers

The U.K.'s Financial Conduct Authority on Monday extended rules about transparent investment policies to apply to delegated portfolio managers, financial advisers and alternative fund managers.

The publication of new complementary rules is aimed at improving price competition and fund information disclosure in the U.K. market.

In April, the FCA set out a number of rules — following its Asset Management Study — to ensure money managers that run £3 trillion ($3.9 trillion) on behalf of investors in the U.K. provide value for money. Under the new rules announced Monday, money managers will be expected to clarify fund objectives to investors to allow them to make the right choices. Managers will also need to present past performance of a fund against every benchmark used and show to investors where a performance fee is specified in a prospectus.

"We expect fund managers to explain what their funds are doing in consumer-friendly language. Clear and helpful objectives should mean better informed consumers making decisions to invest in funds that are more suited to their individual needs and expectations," the FCA said.

Under the new rules, fund managers will also be obligated to explain why their funds use particular benchmarks, reference them consistently across the fund's documents and set out any limitations on their funds' investments.

"We consider that a firm should be able to take on board the points we make in our guidance without significantly adding to the costs in this area," the FCA said.

"We do not agree that the new guidance will significantly increase administrative burdens on firms," the FCA added.

Christopher Woolard, the FCA's executive director of strategy and competition, said in a news release: "Today's remedies build on those we've already introduced and will make it easier for investors to choose the best fund for them and help them achieve their investment objectives."