Strict new Financial Conduct Authority (FCA) regulations are due to be introduced on 1 April 2019. They will require fund managers to make an annual assessment of value, as part of their duty to act in the best interest of investors in their funds.
In addition, from 1 September 2019, fund managers must also appoint a minimum of two independent directors to their boards.
The driving force behind the new rules is to help ensure that fund managers act in the best interests of the public who have invested their money into the fund. The new rules follow the FCA publishing its findings from a review of the asset management market in 2017. There were concerns that investors were not always clear what the objectives of the funds are and the lack of an appropriate benchmark to measure fund performance against.
Firms will have to comply with these new annual assessments from September 2019.
As a result the fund manager’s annual assessments will have to publish the results. Therefore these need to include whether any corrective action has been undertaken as a result of any unjustified fee charges being levied.
Furthermore, the FCA has also brought in technical changes to help improve fairness in the way that fund managers earn profits from investors, by buying and selling their funds. The changes are to help boost the levels of protection for investors who are not closely monitoring their investments. FCA will be implement the new regulations within 12 months.
Further information is available on the FCA website