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Fund Manager Value Statements

What has happened?

With nearly a year and a half still to go until the FCA’s deadline, fund groups are already lining up how they will deliver the prescribed value statements to clients. As part of its asset management market study, this can be viewed here. The FCA imposed a new requirement on fund managers to review and document to clients on at least an annual basis exactly how the products they were sold offered them value for money. The value assessment must be applied separately for each class of units in a scheme.

There are seven minimum considerations the FCA will require fund managers to document in their value assessment (see the table below): quality of service, performance, general authorised fund manager costs, economies of scale, comparable market rates, comparable services and classes of units.

This means managers must assess the range and quality of services, whether returns align with the fund’s objectives, how payments for services like research stack up and whether better deals for the same service may exist elsewhere in the market. The FCA has said this is a “minimum basis for the assessment”, but managers could also make value judgements on other aspects of their service. Failure to do so could be a breach of the FCA’s client’s best interest rule.
The FCA ruled in its study that “fund managers have not considered robustly the value they offer to investors under the existing rules” and that “this is leading to harm to investors through poor value products”.

While the FCA has pushed back the implementation date of the rules to 30 September 2019, giving managers 18 months to prepare, it is understood that work is already under way at many investment houses to line up the necessary compliance value assessments.

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How Thistle can help you?

Thistle will continue to keep this programme under review and will issue further updates where necessary. Please contact Thistle if you need assistance in relation to any of these issues.