In relation to UK Authorised Fund Managers, in respect of their management of authorised funds, the FCA has published new rules and guidance to improve the quality of information available to consumers about the funds they invest in.
The new rules and guidance:
- set out how fund managers should describe fund objectives and investment policies to make them more useful to investors;
- require fund managers to explain why or how their funds use particular benchmarks or, if they do not use a benchmark, how investors should assess the performance of a fund;
- require fund managers who use benchmarks to reference them consistently across the fund’s documents;
- require fund managers who present a fund’s past performance to do so against each benchmark used as a constraint on portfolio construction or as a performance target, and
- clarify that where a performance fee is specified in the prospectus, it must be calculated based on the scheme’s performance after the deduction of all other fees.
The new FCA Handbook rules and guidance relating to benchmarks will come into force in May 2019 for new funds and in August 2019 for existing funds.
The new rules follow previous FCA publications in relation to Authorised Fund Managers which cover:
- a requirement for fund managers to make an annual assessment of value, as part of their duty to act in the best interests of the investors in their funds;
- a requirement for fund managers to appoint a minimum of two independent directors to their boards;
- the introduction of a new prescribed responsibility under the Senior Managers and Certification Regime to bring individual focus and accountability; and
- technical changes to (i) improve fairness around the way in which fund managers profit from investors buying and selling their funds; and (ii) facilitate the movement of investors into cheaper share classes.
These rules generally come into force in September 2019 though rules concerning Box Profits come into force in April 2019.
