Global Trustee and Fiduciary Services News and Views Issue 50

Prime, Futures and Securities Services | Culture and Conduct 42 The publication of a second consultation paper addresses the FCA’s concerns that even actively engaged investors do not find it easy to choose which fund is right for them. CP18/9 proposes remedies related to funds providing better information about what they are offering. Specific areas in the CP18/9 include: • Published guidance reminding AFM’s how they should express fund objectives and investment policies to make them more useful to investors. • New rules so that AFM’s must explain why they use benchmarks, or if they do not, how investors should assess the performance of the fund. • A requirement for AFM’s to reference benchmark use consistently across funds literature. • Ensuring that where AFM’s present the fund’s past performance, benchmarks used as a constraint on portfolio construction, or as a target, must be presented alongside the past performance. • And amendment to performance fee rules to provide that performance fees must be calculated on performance net of other fees in all cases. The consultation closed on 5 July 2018 and the FCA is now expected to provide an update early in 2019 after consideration of the feedback received before finalising any further rules. 1 “CP18/9: Second Consultation on Remedies Following the Asset Management Market Study” from www.fca.org.uk It should be noted in CP18/9 that the FCA recognises that there are some aspects of making objectives clearer where there could be opportunities for the industry and consumers to work together and have welcomed the intention of the Investment Association (IA) to develop industry guidance as to how objectives may be explained more clearly to investors. The IA’s Investor Communications Working Group, with whom the FCA will participate as an observer, is taking this work forward and output is expected by the end of 2018. Please see the placemat overleaf for the key considerations of both PS18/8 and CP18/9. Andrew Newson Senior Fiduciary Technical Analyst, Regulatory Services Global Trustee and Fiduciary Services Citi THE FINANCIAL CONDUCT AUTHORITY’S ASSET MANAGEMENT MARKET STUDY MARCHES ON In addition to the Financial Conduct Authority’s (FCA’s) Policy Statement PS18/8 that set out final rules and guidance to address some of the findings of its Asset Management Market Study (AMMS), the FCA also published on 5 April 2018 a Consultation Paper CP18/9 on Further Remedies to the AMMS that proposes rules and guidance to improve the quality, comparability and robustness of information available to investors. 1