Wed, 28/06/2017 - 11:14
Martin Gilbert, chief executive of Aberdeen Asset Management, comments on the FCA’s proposed changed to the way th UK asset management industry operates…
I strongly welcome the FCA’s Market Study as it provides clear guidance on how the FCA wishes the industry to operate in the future. Its recommendations to improve investor protections through better governance and to drive competition through greater transparency of fees and fund objectives are constructive and sensible. With investment risk increasingly being passed down from governments and employers to individuals, it is crucial that asset management evolves to meet this new world.
I have stated several times that I am in favour of all-in fees including all costs as the industry has an obligation to deliver what the customer wants. Incorporating dealing charges for equity funds should be straightforward particularly for those managers, like ourselves, who have low portfolio turnover. It is more challenging to calculate all-in-fees for bond funds, but I’m encouraged the industry is already looking at ways of doing this. We need to embrace the concept and commit to finding a solution for the best interests of clients
I am a vocal advocate of the benefits of involving independent directors in fund governance, having seen how they help elsewhere in the world. While supporting FCA’s general moves in this direction, Aberdeen would advocate going further than the FCA currently suggests by introducing two independent directors on to the Boards of UK open-ended fund ranges. This introduces a separate and independent level of oversight from that undertaken by the manager, with an exclusive focus on the interests of fund shareholders as distinct from firms own commercial interests – a point which FCA acknowledges in its consultation paper. This finer point notwithstanding, I certainly agree that strengthening the onus on both investment managers and fund boards to consider value for money for investors will help to protect investors’ interests.
I firmly believe these remedies will not only benefit customers but ultimately strengthen confidence and competitiveness in the UK asset management industry.
The industry now needs to engage with the regulator to discuss and coordinate the implementation of the recommendations.