Fund managers fall short on assessing value of funds

The FCA requires authorised fund managers (AFMs) to carry out an Assessment of Value (AoV) at least annually. The AoV should assess whether fund fees are justified by the value provided to fund investors by using a set of minimum considerations.

However, a review of 18 AFMs between July 2020 and May 2021, covering different business models and sizes, has found that most had failed to implement AoV arrangements that met these standards. The FCA found that many firms did not consider what the fund should deliver given its investment policy, investment strategy and fees.

The FCA expects all AFMs to consider the findings of the review, use them to assess their AoV processes, and make changes to address any shortcomings where necessary. The FCA intends to review firms again within the next 12 to 18 months.

Lucy Hadrill