An independent U.K. financial watchdog has laid into the country's asset management industry, saying that competition is not working effectively in several areas.
The Financial Conduct Authority's (FCA) interim review kicked off a year ago, looking into whether institutional and retail investors are getting good value for money when buying services from the near £7 trillion ($8.6 trillion) national asset management industry.
Amid the scathing criticisms lobbed at practitioners, the FCA says fund objectives are not always clear and that the performance of funds is sometimes compared to inappropriate benchmarks. Above all, the regulator accused asset managers of asking for indefensibly high fees.
According to the review, "There is limited price competition for actively managed funds, meaning that investors often pay high charges. On average, these costs are not justified by higher returns."
"We want to see greater transparency so that investors can be clear about what they are paying and the impact charges have on their returns. We want asset managers to ensure investors receive value for money through pursuing energetically their duty to act in their customers' best interests," added the paper.