The listing follows the FCA’s decision to allow exchanges to create a UK listed market segment for crypto asset-backed Exchange Traded Notes (cETNs), available for professional investors only.

The Fidelity Physical Bitcoin ETP, which tracks the price movement of the world’s leading cryptocurrency and is 100 per cent physically backed by bitcoin, was launched in February 2022, listing first on the Deutsche Börse Xetra and the SIX Swiss Exchange. The firm writes that it aims to represent a convenient and cost-effective way for investors to gain exposure to bitcoin. Fidelity Digital Assets (FDA) acts as custodian.

In February 2024, Fidelity cut the Ongoing Charges Figure on the product from 0.75 per cent to 0.35 per cent, writing that this makes it a competitively priced ETP available to professional investors.

Stefan Kuhn, Head of ETF & Index Distribution, Europe, Fidelity International, comments: “Approval of the first spot bitcoin ETFs in the US has spurred interest from investors in cryptocurrencies all over the world. The FCA’s decision to authorise crypto asset-backed Exchange Traded Notes for professional investors is a positive development and reflects the increasing acceptance and demand of digital assets offered through a secure and regulated exchange.

“The Fidelity Physical Bitcoin ETP offers professional investors in the UK an institutional quality solution to enter the market in a familiar, simple and secure way.”

Ahead of this week’s election, market participants are calling on the future government to ensure pension assets are effectively directed to support the nation’s infrastructure.

Julius Pursaill, a strategic adviser at fintech Cushon, says:“There’s broad consensus about the need to find probably very large sums of capital to drive the growth agenda, and more generally to invest in UK societal infrastructure. And it’s not clear where exactly this large sum of money is going to come from.”

He adds: “As a consequence, all parties will view pension fund assets with interest and consider what steps they might take in order to release some of those assets to flow into UK growth and societal infrastructure investments.”

Where previously interference from state in the investment strategies of UK pensions funds was considered taboo, Tom McPhail, the lang cat director of public affairs, says all parties are willing to direct schemes towards assets that support UK growth.

“Now it is okay for governments to intervene in this space and direct what pension funds do with these assets; it is going to happen whoever wins the next election. Really, all we’re debating about is how it happens and how far down this road we go.”

McPhail adds that far from running contrary to fiduciary duty, encouraging UK pension funds to invest in the UK is line with their goals to deliver outperformance to members.

He commented: “I think there are arguments to suggest that investment in UK PLC is actually arguably attractive from a fiduciary perspective. We think there’s additional value being left on the table, which is easier to extract from UK assets.

There are similar views from high-net-worth investors (HNWIs) who believe the UK’s political landscape is not supportive of homegrown wealth.

A survey of surveyed 744 clients about their views on wealth creation, current taxes and the attractiveness of the UK, from Wealth Club finds more than half (55 per cent) of HNWs felt that the UK is not supportive of wealth creation/creators. More than two-fifths (42 per cent) say the UK was not an attractive place to set up a business; and just under a third (31 per cent) of respondents say they are more inclined to leave the UK for financial reasons, compared to 12 months ago.

Nicholas Hyett, investment manager at Wealth Club, says: “The UK has an image problem. Wealthy investors think the country is an unappealing place to start a business, with a culture that’s unsupportive of wealth creators and high levels of taxation. Changing this group’s perception of the UK should be a key goal for any incoming government. Millionaires are already leaving the UK in droves – costing the exchequer tax revenues and draining the economy of the entrepreneurs and investors who start and support young businesses.”

Jupiter writes that it has agreed with GAM that, in order to best serve investors in the GAM UK Equity Income Fund, the fund will continue to be managed by Adrian and Chris following their move. Initially, Jupiter will manage the fund under a subadvisory agreement until it is transferred to Jupiter’s platform later in 2024, subject to customary approvals.  Additionally, subject to regulatory approval, Adrian and Chris will at some point next year assume management of the GBP1.5 billion Jupiter Income Trust, currently managed by Ben Whitmore. Gosden will report to Kiran Nandra, Head of Equities, and Morrison will report to Adrian.

Over three years, the GAM UK Equity Income Fund has recorded top quartile performance, returning 27.7 per cent versus the FTSE Allshare benchmark of 24.3 per cent (as at 30.09.23). Before joining GAM in 2017, Gosden co-managed the GBP10 billion UK equity income franchise at Artemis, having previously held roles at Societe Generale Asset Management and Fleming Investment Management.

Chris Morrison worked closely with Gosden during their time at GAM, having joined the company in 2011. Prior to that, he worked at Bank of Tokyo Mitsubishi UFJ Asset Management where he managed European equity portfolios.

Gosden says: “I am excited to join Jupiter and am looking forward to being part of its successful equities team. Their ethos of high conviction, truly active management is closely aligned with the way that Chris and I have invested over our careers and which we continue to believe can deliver the best outcomes for clients. UK equities have not been in favour with investors in recent years but the United Kingdom is home to many companies which are leaders in their field, with strong balance sheets and resilient business models. Valuations are low and, with the combination of strong dividends and enhanced share buybacks, I believe we will see increased appetite for the asset class from both domestic and international investors.”

Kiran Nandra, Head of Equities at Jupiter Asset Management, says: “Adrian is one of the most highly regarded UK Equity Income investors in the market with a very strong track record of delivering performance for clients and of raising AUM in this asset class. We are delighted to have him as part of the equities team at Jupiter. The current manager of our Jupiter Income Trust, Ben Whitmore, manages a range of value strategies and will continue to focus on these.

“Since I joined Jupiter in the early part of this year, we have been looking closely at our equity range of funds, including UK equities, and it is our intention to continue to develop and grow this part of our business, ensuring our clients have access to the best investment talent and a compelling mix of high quality, differentiated active investment strategies.”

In the paper, entitled ‘Strengthening the UK’s Asset Management Industry’, the IIMI – formerly known as the New City Initiative – said its members identified four main areas where there was “significant opportunity for improvement” by the Financial Conduct Authority (FCA) and other UK government bodies.

These chiefly involve:

·      Streamlining the fund authorisation process for start-up firms and new fund launches, which many firms consider to be unnecessarily slow and cumbersome.

·      The FCA taking a more proactive stance to developing the UK as an asset management centre, and doing more to replicate its peers in Luxembourg and Ireland in its commitment to promoting the UK as an asset management hub.

·      The UK regulator also engaging more actively with the industry about ways to strengthen and enhance the sector’s position in the global market.

·      And the UK government reforming specific regulations and tax rules that would help to support the local funds industry, encourage greater re-domiciliation of funds into the UK, and create job growth across the country in asset servicing and other fund-related service activities.

“As the UK recovers from COVID-19, it is vital that the country’s highly successful asset management industry remains competitive,” said IIMI chairman Nick Mottram, an experienced global equity investor who is also chairman of Dalton Strategic Partnership LLP.

“While Brexit has thrown up a number of operational and logistical challenges for domestic asset managers marketing into the EU, the UK’s new-found autonomy does give it much greater flexibility to shape regulation and policy as it relates to funds.”

He added: “Much of the feedback received from our members did not come as a surprise. For example, a number have suggested that the time-frame for FCA fund authorisations be reduced from six months to one month, while there are also calls for firms whose target client base is wholly institutional to be allowed to engage in a certain degree of pre-marketing ahead of being authorised.”

Many of the IMII members – which comprise independent, owner-managed businesses – believe that the FCA’s slow-paced regulatory authorisation and supervisory process presents a major obstacle to firms being able to grow their businesses quickly at a time when operational costs are rising exponentially.

In addition, member firms are also calling on the FCA and the government to adopt a more proactive approach to promoting the UK as an asset management centre and taking steps to boost the competitiveness of the UK asset management industry, especially following Brexit – comparing the UK authorities unfavourably with their counterparts in Ireland and Luxembourg.

“An IIMI member highlights that in comparison to the CBI (Central Bank of Ireland) and the CSSF (Commission de Surveillance du Secteur Financier) in Luxembourg, the FCA is simply not as engaged in dialogue with the industry as it should be,” read the think tank’s report. “The member continues that it is critical the FCA communicates more regularly with asset managers in general – as this will help to promote best practices.”

In terms of specific financial services regulation reforms, the IIMI is hopeful that the UK government – now that the UK is outside the EU – is open to the idea of streamlining or amending certain EU rules that are perceived by the industry as being excessively burdensome.

These include the widely-derided Solvency II risk-weighted capital requirements regime for insurance companies – where reform could free up an estimated GBP100 billion of capital for much-needed investment into illiquid assets such as infrastructure and green energy projects, according to the IIMI – and the equally unpopular MiFID II directive, where the UK government has already implemented what the think tank calls “welcome” changes such as excluding small-cap company research from the unbundling rules.

However, III members believe that it would be “imprudent” to make any significant amendments to either the AIFMD (Alternative Investment Fund Managers Directive) or UCITS regimes – which have been transposed post-Brexit into UK law with only minor administrative alterations.

In recent years, the IIMI has been a strong supporter of the need for the UK to develop a domestic fund regime. A ‘Call for Input’ industry consultation and review initiated by the UK Treasury in 2021 has resulted in the establishment of a new Long Term Asset Fund (LTAF) open-ended fund vehicle – although there is general disappointment in the investment management industry, especially amongst private markets and alternatives fund managers, that many other ideas and initiatives have not yet been taken up.

“Looking at the bigger picture, IIMI continues to be a firm advocate for the development of a domestic UK fund regime,” said Mottram. “The UK is home to a wide range of asset management talent, best-in-class service providers, a deep pool of legal and accountancy expertise, and a solid regulatory and common law regime. As such, the country is in an excellent position to support the re-onshoring of funds and, with it, asset servicing jobs.”

He added: “Should there be widespread re-domiciliation of funds, this could have a significant impact on the fortunes of the UK economy. With the incumbent government now prioritising regional economic development, IIMI believes the asset management industry could help facilitate this.”

“If the UK is able to develop a popular fund structure, it could result in a huge increase in asset servicing roles – many of which do not necessarily need to be carried out in London. If more professional services firms – such as fund administrators – establish themselves in the regions, local economies will flourish. This is an idea which the UK government is actively exploring and we hope to see it come to fruition.”

Founded in 2010, the IIMI’s aim is to serve as an independent, expert voice in the debate over financial reform and the future of financial regulation – promoting the values and practices of owner-managed firms that align their interests with those of their clients and investors, and raising awareness of the contribution that smaller, entrepreneurial asset management firms make to the economy and to society at large.

CIC said the investor base in Fund II comprises a geographically diverse group of some 50 institutional and strategic investors, with almost half of the capital raised having come from UK-based investors including M&G and government-owned venture growth investment group British Patient Capital.

The VC firm was founded in 2013 to improve the success rate of innovative start-ups originating from the University of Cambridge and the broader Cambridge ecosystem, and to encourage more academics and entrepreneurs to build science-based businesses in the technology and healthcare sectors.

As a preferred investor for the University of Cambridge – whose endowment fund is one of CIC’s core founding co-investors – the group has unique access to investment opportunities in the ecosystem in and around Cambridge, which is often referred to as ‘the Cambridge Cluster’ or ‘Silicon Fen’.

Since its inception CIC has invested in around 40 companies and disruptive deep-tech and life sciences businesses in sectors including artificial intelligence, internet of things, quantum technologies, autonomous systems, therapeutics, medtech/diagnostics, digital health, and genomics/proteomics.

In addition to its portfolio companies, CIC has also set up two Cambridge-based business accelerators, DeepTech Labs and Start Codon – with the aim of supporting entrepreneurs to develop their commercialisation and technology strategy, bridging what the firm describes as “the gap between translational research and Series A-ready businesses”.

“With Fund II, CIC now manages in excess of £500 million, giving it the scale to support its portfolio companies throughout their life cycle, providing investment capital as well as strategic and operational support,” the firm said in a statement.

CIC said Fund II has already made six investments. These include Riverlane, a quantum computing software provider; Pretzel Therapeutics, a leading developer of mitochondrial therapeutics; Salience Labs, a photonic compute company; and Epitopea, a cancer immunotherapeutics company.

The portfolio companies in CIC’s first fund include CMR Surgical, a keyhole surgery innovator that closed the world’s largest medtech private financing round in 2021 at GBP425 million, valuing the company at over GBP2 billion; and electronics maker PragmatIC Semiconductor, which recently raised USD80 million to build its second manufacturing facility in the North of England. 

Andrew Williamson, Managing Partner of CIC, says: “Cambridge, UK is one of the fastest-growing science and technology innovation ecosystems in the world. Since our inception, CIC and our co-investors have invested more than £2 billion in sectors as diverse as robotics, semiconductors, genomics, gene therapy, therapeutics, liquid biopsy, artificial intelligence, and edge computing.”

He adds: “We are delighted to launch our new fund and to work with a dynamic group of entrepreneurs and investors to capture the full potential within the thriving Cambridge ecosystem.”

Labelling Cambridge as “Europe’s leading capital for innovation”, CIC’s website describes the Cambridge ecosystem as holding “one of the richest seams of scientific knowledge and technological innovation in the world”.

It adds: “With two universities, multiple leading research institutes, 109 Nobel Prize winners, and R&D departments of over 60 multinational businesses, Cambridge has generated 17 billion-dollar businesses, three of which have been valued at over USD10 billion.”

CIC says its success in finding world-class start-ups to back is underpinned by its unique relationship with Cambridge University and its close collaboration with the university’s commercialisation unit, Cambridge Enterprise.

“As a preferred investor for the University, we leverage our deep relationships to identify and fund visionaries to build global, category-leading companies.”
 

The Discussion Paper forms part of the FCA’s new wider ESG Strategy, also released today. The strategy sets out the FCA’s critical role in supporting the transition to a more sustainable economy, working with industry, listed companies and international partners.

The Strategy will be built around five key themes:

Transparency – promoting transparency on climate change and wider sustainability along the value chain

Trust – building trust and integrity in ESG-labelled instruments, products and the supporting ecosystem

Tools – working with others to enhance industry capabilities and support firms’ management of climate-related and wider sustainability risks, opportunities and impacts

Transition – supporting the role of finance in delivering a market-led transition to a more sustainable economy

Team – developing strategies, organisational structures, resources and tools to support the integration of ESG into FCA activities

The FCA is also gathering feedback on supporting entity-level and product-level disclosures. The FCA will leverage existing initiatives in this area to ensure coherence with market practice and other regulation. The input received will then guide the FCA’s policy design in this area, ahead of consultations on new proposals in spring 2022.

Emma Wall, Head of Investment Analysis and Research at Hargreaves Lansdown, says: “It is fantastic to see the regulator giving responsible investing the attention it deserves. We believe investing with environmental, social and governance issues in mind is simply good risk management – leaders who run businesses conduct aware, with the climate and society in mind, are likely to have sustainable revenues and profits. Investors have recognised this too – amongst our clients flows into responsible investment funds have gone up 6,000 per cent in the last five years. We welcome the particular focus on transparency, which we know investors are calling for, as well as the wider commitment to supporting the transition to a greener, cleaner economy.”

UK pension schemes will face challenges in reporting the climate impact of their investments, says the investment industry as The Pensions Regulator closes a consultation on its draft guidance for Task Force on Climate-related Financial Disclosures (TCFD)-aligned reporting.

From 1 October, pension schemes with more than GBP5 billion in assets will be required to start reporting on the climate impact of their investments.

The Pensions Regulator’s draft guidance aims to guide schemes on areas including governance, strategy and scenario analysis, risk management, and metrics and target setting, and publishing a TCFD-aligned report.

Joe Dabrowski, deputy director of policy at industry body The Pensions and Lifetime Savings Association (PLSA), says that the draft guidance “strikes the right balance between encouraging ambitious governance standards and acknowledging the many challenges schemes face”.

Nevertheless, “further clarification” is required on issues including “reporting expectations across different asset classes, where data availability may be highly varied”.

“We look forward to working with TPR to address these areas as quickly as possible,” says Dabrowski.

Jos Vermeulen, head of solution design at  Insight Investment, notes that there are still “lots of challenges” for pension schemes’ TCFD-aligned reporting. 

Insight Investment manages almost GBP750 billion in assets, across liability driven investment, fixed income and currency, multi-asset and absolute return strategies.

“There are a lot of issues around how do you come up with a total figure [carbon emissions] for a pension scheme,” says Vermeulen. 

UK pension schemes will be required to report their absolute total carbon emissions for scheme assets, as well as the carbon intensity per million pounds invested by the scheme.

Vermeulen explains one of the difficulties in calculating total carbon emissions. “To give an example, if you think about it just from a UK perspective, we have the UK’s total greenhouse gas emissions. Now, that will include the corporates that operate within that country’s emissions as well. So if you want to calculate your share of the total greenhouse gases, as an investor, there is a bit of double counting.” 

Vermeulen notes that pension schemes will rely on asset managers to supply data about the carbon emissions related to specific investments.

“And then, how can we add these things up, I think that’s probably the biggest challenge – how do we add up these different metrics or different measures to come up with our equity absolute emissions figure, our credit absolute emissions, etc,” says Vermeulen. 

“Fortunately the regulator has recognised that this is very much work in progress. So I think it’s more about creating awareness and starting on this direction as opposed to everything’s going to be set in stone and you’re never allowed to change anything. So the industry is working hard to come up with sensible measures that the trustee board can then monitor,” says Vermeulen.

The Financial Conduct Authority (FCA) has received a total of 2,754 separate allegations of misconduct, including fraud, money laundering and compliance complaints, according to official figures. 

The data, analysed by a Parliament Street think tank and contained in the FCA’s newly published Annual Report and Accounts 2020/21, details the allegations, which were provided by a total of 1,046 whistleblowers in the last 12 months.
 
The report also revealed that there are 184 individuals and firms under investigation for carrying out unauthorised business, and £189.8 million in financial penalties had been handed out over the same period, alongside a number of prosecutions alleging insider dealing, investment fraud or money laundering.
 
The FCA revealed it has strengthened its AML supervisions over the last year, becoming more data-led and drawing from a range of information sources. As a result, at the end of March 2021, the body said that it had increased the number of firms required to submit financial crime-related data.
 
The 1,046 ‘whistleblowing’ reports – staffers reporting against their own organisation – is a small reduction when compared to the 1,100 reports in 2019/20, and, this year, 15 led to ‘significant action’ to mitigate harm, which may have included enforcement action.
 
In a further 135 cases they took ‘action’ to mitigate harm, which included writing to or visiting a firm, requesting further information, or asking a firm to attest to compliance with the rules. 145 cases were said to have helped inform the FCAs work, and were relevant to the prevention of harm, but did not lead to any specific action; 97 cases were not considered relevant, and 654 cases were still being assessed at the time the report was published.
 
The retail banking sector was also subject to scrutiny by the FCA in the recorded period and, in February 2021, a ‘Dear CEO’ letter, detailing the risks of harm that retail banks’ activities were causing, was issued. The regulator handled 97 cases involving AML in the retail banking sector, put in place one Voluntary Requirement Notice (VREQ), progressed 5 s166/skilled person assessments and progressed 15 enforcement cases related to AML failings, one of which was a new case for the period.
 
FY 20/21 also marked the first full financial year when the FCA was responsible for accessing the Anti-Money Laundering (AML) measures of cryptoasset businesses, which pose ‘increase risk of financial crime’. The report revealed that 138 firms that appeared to be trading without having applied for registration had been placed on a public-facing register.
 
Wayne Johnson, CEO, Encompass Corporation, comments: “This year, more individuals are attempting to use the chaos of the pandemic to carry out financial crime. Therefore, it is important that the FCA is taking the necessary to steps to tighten their control and increase visibility over new sectors and payments technologies, such as cryptocurrencies, which are being used to launder money.
 
“But, the fight against financial crime can’t be won by the regulators alone, and businesses from all sectors must improve the efficiency and effectiveness of their onboarding processes, compliance and due diligence, not just for the sake of ‘ticking boxes’ and averting regulatory fines, but to help prevent even more financial crime and dirty money running through critical businesses and infrastructure.
 
“In today’s digital climate, organisations are encouraged to invest in automated regulatory technology, which can boost the effectiveness and efficiency of compliance programmes whilst keeping costs low.”
 

The market for ESG investing in the UK will come under greater scrutiny from the Financial Conduct Authority (FCA), according to a new business plan published by the regulator.

In its ‘Business Plan 2021/22’, the FCA outlined a strategy to “promote integrity” in the sustainable investing market by extending regulatory oversight to ESG service providers, including data and ratings providers.

“We will gather market intelligence to gauge how well firms are supported by service providers, such as ESG rating providers,” writes the FCA.

This follows last month’s recommendation from International Organisation of Securities Commissions (IOSCO), that regulators target ESG data providers as a means to tackling misleading sustainability claims by asset managers.

The FCA has also set out further requirements for asset managers marketing ESG investment products. This includes a proposal to bring forward mandatory TCFD reporting rules for asset managers, life insurers, and pension schemes, from 1 January 2022.

The regulator will also apply scrutiny to investment stewardship. “We will monitor the exercise of investor stewardship by institutional investors, including voting at Annual General Meetings,” says the FCA. 

“If there is insufficient evidence of active stewardship to advance environmental and social goals, we will consider further regulatory action.”

The FCA’s chief executive, Nikhil Rathi, says these developments form part of a larger “step-change” in the regulator’s approach over the next year.

This year, the regulator intends to be “even more innovative, led by data and technology… even more assertive to ensure consumer protection and market integrity… and even more adaptive to meet the challenges we know about and prepare for those that will come,” according to Rathi.

The FCA says it intends to curb greenwashing in the asset management industry, which has become a concern as the market for sustainable and ESG investment funds has skyrocketed.

By the end of 2020, sustainable funds held almost USD1.7 trillion in assets, up 50 per cent over the year, according to Morningstar.

The UK Sustainable Investment and Finance Association (UKSIF), a members’ organisation for sustainable and responsible finance in the UK, is “very supportive” of the FCA’s plans to oversee ESG investing.

“We think that it is really important that the regulator is taking a close view of what’s going on in ESG, and we’re very pleased to see both the FCA and the Bank of England get a net zero component added to their mandate last budget, which is absolutely essential for the work we’re doing,” says James Alexander, chief executive of UKSIF.

In March, the UK government expanded the FCA’s remit to include the transition to net zero, meaning that financial institutions may be mandated to produce transition plans in the coming years.

Alexander believes that the FCA’s focus on data providers will be important in allowing market participants to “feel comfortable using” ESG ratings.

This will require accurate self-reporting by companies, as well as a transparent method for building ESG ‘ratings’.

“The challenge that we have with data is the amount of data that we’re trying to talk about. If you talk about ESG, it fundamentally means everything non-financial, in its full entirety,” says Alexander.

The full gamut of ESG data ranges from information on company carbon emissions and water use, through to workforce diversity and corporate governance structures.

Alexander notes that amalgamating all of this information requires ratings providers to make a “judgment call” on which data matter the most, and tiny tweaks to the weightings can drastically alter a company’s overall ESG score.

“I think that what we need is to have greater transparency on how the numbers are amalgamated together to create ESG scores,” says Alexander. 

He adds that many of UKSIFs members are now building their own assessments based on raw company data.

Research from SquareWell Partners shows that more than half of the world’s 50 largest asset managers have developed their own proprietary internal ratings system. At the same time, 40 per cent use data from at least four different ESG ratings agencies, such as MSCI and Sustainalytics. 

“What we what we definitely do know is that the role and importance of the data industry in achieving our ESG goals is absolutely paramount to success,” says Alexander.

Alexander also notes the FCA’s focus on investment stewardship as a crucial area where public confidence must be built.

As shareholders of large companies, investors have huge sway over the way the real economy operates. 

“If we just take a divestment approach to hitting net zero, we’re not going to make the change in the real economy that we as a country need to see,” he says. 

Having launched the AoV reporting requirement more than a year ago, the FCA has found fund managers falling short on assessing the value of their funds and Mikkel Bates, Regulations Manager at FE fundinfo believes the initial review could be seen as an attempt to reduce fees for investors.
 
Bates says: “The FCA has said in the past that it is not a price regulator, but that it favoured greater transparency as the tool to drive competition and hence price pressure. This review shows that it has moved beyond that stance, as it seems that transparency alongside self-justification of fees has little impact on competition. So, it is out to shake up the old order and drive charges down to something nearer what it costs groups to manage funds.

“Despite a need to assess performance for each share class net of fees, the FCA found some groups used gross returns or only assessed the cheapest share class, but the strongest criticism was aimed at active managers of funds whose objective is as vague as “capital growth”. Achieving a positive return in rising markets, while underperforming the comparator benchmark, was not deemed a justification for higher fees than passive funds.”
 
Beyond the initial findings surrounding fund groups’ justifications of their fees, the review also raised some concerns about the role of some independent non-executive directors (iNEDs) and their attitude towards AoV reporting.
 
Bates adds: “While the quality, knowledge and engagement of some iNEDs was acknowledged, the FCA was not impressed by those who could not demonstrate knowledge of the AoV requirements, didn’t show that they represented the interests of investors, or even came across as ‘antagonistic towards the aims of the AoV process’.”
 
For fund groups, one of the main complaints raised concerning AoV reporting was that the FCA provided them with little to no guidance on how they should prepare their reports and this perceived lack of clarity was duly acknowledged by the review.
 
Bates says: “With little in the way of prescription and a lot to consider for the first set of assessments – particularly for those with a fund year end that put them near the front of the queue, with little or no precedent – it’s no surprise the FCA found cause for complaint, but it is a little surprising that so many criticisms are for failures to meet the requirements that have been clearly set out. It’s no wonder the report card says ‘could do better’. Nonetheless, the review suggested groups should look at others’ reports for examples of good practice and make changes to their own where necessary.
 
“That said, the FCA also pointed out that the audience may not always be the end investor, but other stakeholders who make their own assessments of fund value for investors. Anecdotally, the main readers of AoV reports have been competitors, journalists and campaigners against the fees charged by active funds. This review will give all of them something to add to their armoury.
 
“Another review will be undertaken in a year to 18 months and the FCA expects firms to have taken on board its comments, with the threat of “other regulatory tools” if they don’t. Quite what this will entail is open to speculation.”