Asset management market study

Terms of reference
Open consultation: Interim report
Interim report consultation closed
Final report

We have published the final findings of our asset management market study. As part of this, we set out a package of remedies to address the concerns identified.

Show final report (PDF)

The asset management market study final report includes the following annexes:

Our market study

We published the terms of reference for the asset management market study in November 2015. We set out our intention to understand how asset managers compete to deliver value to both retail and institutional investors. Following our terms of reference, we conducted analysis of over 20,000 shareclasses and 30,000 investment strategies.

In November 2016 we published the interim report. This set out our provisional view on the way competition works for asset management services, the resulting outcomes for investors and our proposed remedies to address concerns which we identified. 

Having considered the consultation feedback to the interim report and carried out further work, we confirmed the key findings set out in the interim report as final.

Our findings

The final report follows the interim report published last year which found that price competition is weak in a number of areas of the industry. Despite a large number of firms operating in the market, based on our sample, we found evidence of sustained, high profits over a number of years. We also found that investors are not always clear what the objectives of funds are, and fund performance is not always reported against an appropriate benchmark. Finally, we found concerns about the way the investment consultant market operates.


We have proposed an overall package of remedies to make competition work better in this market, and protect those least able to actively engage with their asset manager. We consider that this will increase efficiency, lead to the UK asset management industry being a more attractive place for investors and so improve the relative competitiveness of the UK market.

Our overall package of remedies is designed to bring together a consistent and coherent framework of interventions. We recognise that some investors are not well placed to find better value. Because of this, we are strengthening the duty on asset managers to act in the best interests of investors and are seeking to provide greater protection for investors. The remedies package also seeks to enable those investors who are able, to exert greater competitive pressure on asset managers. It will increase the transparency of costs so that those seeking information can get it. We are also working towards providing greater clarity of fund objectives and performance reporting. Finally, the package seeks to improve how effective intermediaries are for both retail and institutional investors.

Next steps

In the asset management market study final report published in June 2017 we proposed a package of remedies consisting of:

  • measures to give protection to investors who are less able to find better value for money
  • measures to drive competitive pressure on asset managers
  • proposals to improve the effectiveness of intermediaries

We published a consultation paper relating to the first group of remedies alongside our final report.

This update is about recent developments and next steps.

We are also proposing that the Senior Managers and Certification Regime (SM&CR) be extended to cover all FSMA-authorised firms, including asset managers. The consultation on our proposals, which closed on 3 November 2017, explains how the SM&CR will change how we regulate individuals working in asset management.

We published a further consultation on transitioning firms from the Approved Persons Regime on the 13 December 2017. We plan to publish our final rules in a Policy Statement in summer 2018.

Remedies to drive competitive pressure on asset managers

Fund Objectives

The market study made clear the importance of funds having clear objectives, and identified room for improvement in this area. Clear objectives allow investors to understand what a fund is trying to do, compare different funds, and monitor how well the fund is performing.

This is a complex area and we want to involve the right people to make progress on this issue. We chaired a working group, which met from September and conclude its work early in 2018. The output from this group will inform any consultation proposals we bring forward. If we consult on changes to our rules this will be in Q1 2018.

To ensure the process is open and transparent and that we gather the broadest feedback possible, we published the minutes of working group meetings on our website and continue to invite comment on these.

Find out more about the find objectives working group

Use of benchmarks and performance reporting

We want to make it clearer to firms what we expect from them when they are explaining to investors how they use a benchmark (or why they do not) for measuring fund performance. This includes the consistency of performance reporting across all communications with investors.

We plan to align this work with our other remedies given the links between objectives, benchmarks and performance. Therefore, we intend to consult on these topics in Q1 2018.

All-in fee

As set out in the final report, we want investors to receive clear and simple information about the costs they will pay for asset management services through an 'all-in-fee' in pounds and pence. Important changes in this area will be delivered by MiFID II and PRIIPs, both of which will apply from January 2018.

Specifically, investment firms will need to provide information about:

  • all costs and related charges for the underlying fund management products
  • all costs and related charges for distribution

These will include the estimated transaction costs investors can expect to pay. The aggregated costs and charges must be totalled and expressed as a cash amount and as a percentage.

At the end of each year investment firms must also provide information about all costs and charges actually incurred, including transaction costs, which could be compared to the estimate. ESMA has provided guidance on these disclosures.

This is a significant increase in the transparency of fees and charges in asset management. We want this transparency to have an impact in terms of awareness and scrutiny of charges. How the information is presented will have an impact on how effective it is. We require that communications be fair, clear and not misleading. We have also done significant work on Smarter Consumer Communications and use of behavioural economics. From this, we have learnt that:

  • Effective communication can improve consumer decision-making: by providing information in a way that is both engaging and comprehensible and by providing information at the best time to use it, through the most effective channels.
  • Where information is placed on a page affects how much attention consumers give it. For example, research has shown that information provided at the top left of an online page is likely to receive more focus than information provided at the bottom right or where you need to scroll down to see it. In addition, investors spend longer on initial pages, and few click through to other pages to seek further information.
  • Consumers need a flexible approach with simple, clear information and explanations. Providing charges in pounds and pence (instead of or as well as percentages) can make the charge more meaningful to investors, particularly for those who are less financially literate.
  • Consumer engagement can best be achieved through rethinking not just what is communicated, but how it is communicated. A predominantly paper-based disclosure may not meet the information needs of many of today's consumers.

We expect firms to have regard to the findings above when presenting to investors the information required by MiFID II. In practice this means displaying this information clearly and prominently.

In addition we are currently testing some specific ways to improve the effectiveness of the forthcoming MiFID II and PRIIPs requirements by assessing the behavioural impact of certain complementary measures. We are testing:

  • ways to increase engagement with charges through the use of review screens
  • ways to raise investors’ awareness of the impact of charges on their investments over time through warning statements and charts
  • ways to help investors make effective price comparisons through the use of comparator charts

We will publish the findings from the behavioural testing in Q1 2018. If the testing shows that there are ways in which we can make the single charge disclosure more effective for investors, we will consult on any proposed changes to our rules and guidance at that time.

Finally, while we are not generally intending to apply MiFID costs and charges disclosure to all non-MiFID business, as set out in PS17/14, we are considering how aggregated information about costs and charges should be displayed when funds might be bought either through an intermediary or directly from a fund manager. If we believe rule change is required to clarify what we expect in this area we will consult on this alongside other remedies in Q1 2018.

Disclosures to institutional investors

We want to see more consistent and standardised disclosure of costs and charges to institutional investors. We have appointed Dr Chris Sier to chair a working group of industry and investor representatives on institutional disclosure, with a view to agreeing a template for disclosure of costs and charges.

Find out more about the working group

Proposals to improve the effectiveness of intermediaries

Final decision to make a Market Investigation Reference (MIR) to the CMA on investment consultancy and fiduciary management services 

We have made a final decision to make a MIR on investment consultancy and fiduciary management services and to reject the proposed undertakings in lieu.

Investment Platforms Market Study 

On 17 July we launched our market study into investment platforms.

Show asset management market study remedies - timeline (PDF)

Interim report

In November 2016 we published our interim report which set out our views based on our work to date on how competition works and on outcomes for investors.

Show interim report (PDF)

Annexes to the interim report:

Research and reports:

Terms of reference

This outlined the scope of our market study.

Show terms of reference (PDF)

Page updates

02/08/2017: Information added We updated the 'Next steps' section of this webpage.