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FCA to take more market-focused approach to supervision

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Amanda Rowland, financial services risk and regulation partner at PwC, comments on the FCA’s Risk Outlook and Business Plan… 

The FCA has today confirmed a move to a more market-focused approach to supervising across financial services firms. Asset managers may welcome the FCA taking a more consistent, collective view on markets but will want to ensure that the FCA continues to recognise the value the asset management industry brings to the UK and how they differ from other firms in the financial services sector. Given the amount of time spent dealing with FCA requests over the past two years the industry will also welcome the FCA's confirmation that it will look to carry out fewer but more focused thematic reviews in future.

In the context of the asset management industry, the FCA has announced it will conduct a thematic post authorisation review of funds later this year and a competition review of asset managers. The FCA is likely to focus on whether funds are performing in line with how they were sold to investors. This review could, for example, focus on funds sold with a specific target or absolute return objective and identify whether they return what was promised to investors.

The FCA will also focus on non-advised distribution models, pension reforms and individual responsibility. Whilst much of the individual focus will be on banks and insurers implementing the new senior managers regime, senior executives in asset management firms should also look out for further attestation requirements and any additional rules or expectations copied across from the new banking regime. The indirect and knock-on impacts for asset managers will be difficult to identify with any precision at this stage – but firms should ensure they keep an eye on developments in other FS sectors to ensure they are up to speed with developing expectations of asset managers.

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