Global Trustee and Fiduciary Services Bite-Sized Issue 9 2023

Global Trustee and Fiduciary Services Bite-Sized | Issue 9 | 2023 11 QUICK LINKS CYBER FINTECH MONEY MARKET FUNDS SUSTAINABLE FINANCE/ ESG AUSTRALIA ASIA EUROPE NORTH AMERICA UNITED KINGDOM On 10 August 2023, the FCA published the results of its most recent review of processes Authorised Fund Managers ( AFMs ) use for assessment of value ( AoV ). The FCA states that the findings show that many firms have now fully integrated considerations on assessment of value into their product development and fund governance processes. The FCA says this greater focus has also driven changes in fees and charges, resulting in savings of costs to consumers amounting to millions of pounds. However, the FCA says that there remain outliers, where action needs to be taken. This is particularly important with the Consumer Duty, which came into force on 31 July, where firms are expected to deliver fair value for retail consumers. What the review found: • Examples of good practice include moving investors to clean share classes with no trail commission or cutting funds’ fees. • Some firms’ independent non-executive directors did not provide sufficient challenge, with some accepting information provided to Boards at face value without probing further. • Significant differences between good and poor practice in how AFMs assess their funds’ performance. • Firms putting too much emphasis on comparable market rates to justify their fees, rather than conducting an assessment using the full range of value assessment considerations. • Some firms now have better processes for allocating costs but are reaching conclusions on AFM Costs and Economies of Scale that do not take into account the information made available by that better process. The FCA expects firms to consider these findings and to make improvements where required. Link to Results of FCA’s AFMs Assessments of Fund Value 2023 here