On 4 February 2019, the FCA issued its policy statement on further remedies as part of its Asset Management Market Study. Following industry feedback as part of its consultation last year, the FCA has concluded that will be largely proceeding on the basis on which it consulted, with only minor drafting amendments in a few areas.

The policy statement includes:

  • non-Handbook guidance on how authorised fund managers (AFMs) should describe fund objectives and investment policies to make them more useful to investors
  • rule changes to require AFMs to explain why their funds use particular benchmarks or, if they do not use a benchmark, how investors should assess the performance of a fund
  • rule changes to require AFMs that use benchmarks to reference them consistently across the fund’s documents
  • rule changes to require AFMs that present a fund’s past performance to do so against each benchmark used as a constraint on portfolio construction or as a performance target
  • rule changes to require that where a performance fee is specified in the prospectus, it must be calculated on the basis of the scheme’s performance after the deduction of all other fees.

In addition, the FCA is clarifying how COBS 4 applies to the KIID (this change will come into force on 4 February 2019).

The new Handbook rules and guidance on benchmarks will come into force on 7 May 2019 for new funds on 7 August 2019 for existing funds. The FCA’s rules on performance fees will come into effect on 7 August 2019. The FCA reminds AFMs in the policy statement that 'We expect AFMs to take our guidance on fund objectives into consideration when reviewing fund documentation from the date of publication.'