FCA seeks views on updating asset management regulation

by | Feb 20, 2023

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The Financial Conduct Authority (FCA) is seeking views on what regulatory change might help the UK’s asset management industry innovate, better support the investors it serves and boost competition. 

The UK is a leading centre for asset management, with over £11 trillion of assets managed by UK firms. The Future Regulatory Framework provides an opportunity for the FCA to look to improve asset management regulation with a more modern and tailored regime, better meeting the needs of UK markets and consumers. The FCA will make sure any changes are consistent with international standards and enable technological development and innovation.

Today’s paper from the FCA covers a wide range of ideas, including how it can support firms’ use of technology to improve customer experience and efficiency. It also discusses how the FCA’s rules could be streamlined and improved to help firms deliver better support to investors, retail and wholesale, UK-based and international.

Camille Blackburn, Director of Wholesale Buy-Side, said:

“The UK has an opportunity to update and improve the UK regime for asset management. 

“We want to hear from a wide range of voices about how we can enhance the existing standards and what we should prioritise to bring the most benefits to consumers, firms and the wider global economy.  

“Given the UK’s leading role as a centre for asset management, we want to make sure our rules are fit for the future. We want a UK wholesale market which supports the economy and is open to innovation, while remaining consistent with high standards of consumer protection and market integrity.” 

The regulator has not cemented any new proposals at this stage. It aims to promote further discussion and listen to stakeholders’ views about what it should prioritise.

In line with its three-year strategy, the FCA continues its work to promote market excellence and competition across financial markets.

Commenting on the FCA’s paper, Chris Cummings, Chief Executive of the Investment Association said:

“We support the overall aim of the FCA’s discussion paper to ensure the investment management industry is open to innovation and underpinned by high standards of market integrity and consumer protection. Innovation is key if we are to remain a world-leading investment management hub and a supportive regulatory environment is crucial to achieve this. As the FCA acknowledges, this is already a highly regulated sector, and our members are working hard to manage and implement a busy regulatory agenda. The need for any further regulation must therefore be balanced against ensuring the UK remains a global competitive jurisdiction and an attractive place to do business. We welcome the FCA’s consultative approach and will work with the regulator and our members to identify areas where there could be clear benefits from regulatory reform.”  

Leonard Ng, a partner at law firm Sidley Austin in London, comments: 

“The UK’s asset management regulatory regime is the product of decades of EU policy and legislation under the AIFMD, UCITS Directive and MiFID. Each of these directives has in turn been updated individually over time, with “leapfrogging” requirements applicable to different types of managers. With the UK no longer in the EU, it makes perfect sense to try and create an overarching asset management regulatory framework that will not only make the rules easier for asset managers to follow, but also improve investor protection by applying consistent standards across manager types. That said, the UK should be sensitive to the likely high costs and disruption that would result from a major overhaul of its asset management regulatory framework, and ensure that industry voices are heard in this process.”

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