As part of its Business Plan for the financial year ahead, the FCA will launch an investigation into fund management charges; particular attention will be paid to whether savers and investors are receiving value for money, and whether greater transparency and fixed-fees are required.

The FCA has expressed concern that savers end up paying far more than the headline annual management fee in hidden costs. Furthermore, the FCA believe that the lack of openness about how fees are calculated means that savers and investors have no clear picture of how much they’re paying, and what for.

The FCA believe fixed-fees and complete costs transparency will incentivise managers to keep costs down as much as possible, noting that “even a small reduction in fees would generate substantial benefits for savers and investors.” The Business Plan states that a 0.01 percentage point reduction in costs would equate to savings of around £540m annually.

“We therefore believe the potential impact on consumers and impact of any enhancements to competition for fund management services could be significant,” the FCA states in its Business Plan.

However, the Business Plan was also short on detail, merely stating that “we will launch a market study on asset management next year…the issues we will examine will include the charges paid by investors, and the factors that drive those charges.”

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