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FCA Publishes Policy Statement on Further Asset Management Market Study Remedies

On February 4, the UK Financial Conduct Authority (FCA) published a Policy Statement on further remedies to promote competition in the asset management sector, following its asset management market study (AMMS) (see the June 30, 2017 edition of Corporate & Financial Weekly Digest for further details on the FCA’s Final Report on AMMS).

In its Policy Statement, the FCA confirms that it will proceed (with minor drafting amendments) with its remedies on the basis on which it had consulted. The FCA will introduce new rules and guidance which will:

  1. explain how authorized fund managers (AFMs) should describe fund objectives and investment policies to make them more useful to investors;
  2. require AFMs to explain how or why their funds use particular benchmarks or, if they do not use a benchmark, how investors should assess the performance of a fund;
  3. require AFMs who use benchmarks to refer to them consistently across all fund documentation;
  4. require AFMs who present a fund’s past performance to do so against each benchmark used as a constraint on portfolio construction or as a performance target; and
  5. clarify that where a performance fee is specified in a fund’s prospectus, it must be calculated on the basis of the fund’s performance after deducting all other fees.

Appendix 1 to the Policy Statement sets out the Collective Investment Schemes Sourcebook (Miscellaneous Amendments) Instrument 2019, which amends the FCA Handbook’s Conduct of Business Sourcebook (COBS) and its Collective Investment Schemes Sourcebook. The FCA also clarifies how COBS applies to the key investor information documents and that this change went into effect on February 4.

Appendix 2 to the Policy Statement contains final non-FCA Handbook guidance about the description of fund objectives and investment policies that applies to all UK-authorized funds.

The rules and guidance on benchmarks in the FCA Handbook will go into effect on May 7 for new funds, and on August 7 for existing funds. The FCA’s rules on performance fees will go into effect on August 7.

The FCA expects AFMs to take its guidance into consideration when reviewing fund documentation from February 4.

The FCA’s Policy Statement is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume IX, Number 46


About this Author

John Ahern, Financial Attorney, London, Katten Law Firm

John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

+44 (0) 20 7770 5253
Carolyn H. Jackson, International Attorney, Katten Muchin law firm

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws and regulations. 

+44 0 20 7776 7625
Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...