FBC Digital Meeting: Assessment of Value – FCA’s Multi-firm review
6 September 2023
A nuanced report card
In an hour-long meeting on the 6th of September with 100 FBC members and a few invited guests, the FCA’s Garry Murdoch pointed to significant improvements in the AoV processes of the 14 firms in its second review, but argued there is still room for improvement in how firms’ undertook their value assessment
Adding to the 18 firms in the first round in 2021, the FCA has now reviewed the AoV reports and processes for a further 14 firms, making the FCA coverage by FBC estimates just shy of 40% of authorised fund managers in the UK required to produce an annual Assessment of Value report.
Known for his rather direct and sometimes uncompromising approach, Mr Murdoch, who was joined by his colleague Zara Ellis at the meeting, presented a far more nuanced message on this occasion – acknowledging that much work had been across several of the seven AoV criteria but was also very clear this wasn’t across the board, and in many cases, much more work was needed.
AFM Costs is a good example of this. Many firms are now doing robust profitability analysis with detailed allocation at a fund and share class level, but a small number still conflate this analysis with comparable market rates. He added that some firms were still just allocating costs by assets under management, a rather blunt approach.
Mr Murdoch also had a very clear message for the fund board non-executive directors, many of whom joined the virtual meeting from as afar as the US and New Zealand! To the iNEDs who play a key role on fund boards, he said they need to do their bit when it came to challenging the assumptions and data presented. Documenting evidence that the governance body (the fund board, in this instance) and asking the right questions remains a key part of their role, as well as ensuring there is a process in place for robust decision-making, and that this process can be explained.
The meeting also comprehensively covered off several other key AoV areas including Economies of Scale, tiering of fees, Performance and Quality of Service.
FBC members can view the full recording of the meeting here.
To access the recently released full FBC Report: Assessment of Value – an Impact Study, available only to FBC members, click here.
For non-corporate members, interested in the abovementioned study, or FBC’s other AoV-related consulting and advisory services, please get in touch with FBCs Director Communications and Business Management, Suzanne Withers at swithers@fundboards.org
