Are you ready for an FCA review of fund managers’ distributors?
What has happened?
When speaking at a Treasury Select Committee accountability hearing in January 2020, Andrew Bailey said that the FCA intended to examine how firms are implementing the FCA PROD rules on product governance and research. In July, this came to pass when the FCA asked fund managers for details of their biggest distributors as a part of its review of the PROD product governance rules. The FCA is reviewing how asset management firms oversee the design of their products and it has also looked at how managers identify their target market and how they monitor products, as well as whether their distribution activities are in compliance with the PROD rules introduced in January 2018.
Nine firms were contacted as part of the review, and the FCA discussed the review further with eight out of the nine firms contacted.
What do you need to do?
The FCA asked the firms contacted to list their funds’ top ten distributors, what percentage of fund sales they account for, whether distribution is advised, discretionary or execution only, how many investors receive the funds and what proportion of the fund they hold. It also asked the fund managers to list the factors that they considered when selecting their top three distributors. The FCA was also interested in the process of providing appropriate information to those distributors and asked for a copy of the latest disclosures provided to them. It also asked the managers to list how they identify a target market for their funds, how they consider why it is appropriate and whether there are investors that the funds might not be suitable for.
How can we help you?
If you’d like to know more about how we can help with your fund distribution oversight and processes, or any other aspect of FCA compliance, our expert team is here to help. Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.