Helping our clients prepare for FCA benchmarking rules

On the 7th August 2019 the Financial Conduct Authority’s (“FCA”) new rules on benchmarking (covered in the FCA Policy Statement 19/4) are due to come into full force. With this in mind, we recently asked our Asset Manager clients a sequence of three questions in order to better understand the extent of their preparations and any future requirements they may have.

Positively it appears that most of the market are prepared for this transition, with 64% of respondents reporting that they had already allocated categories to each of their benchmarked funds. Having said that, 27% are still unprepared and with only a month to go, a surprisingly considerable proportion.

At the moment, of those who are allocating benchmarks to their funds, 60% are not willing to allocate multiple benchmarks. This is not a huge surprise since in feedback to its consultation paper, the FCA found that respondents “argued that showing past performance against multiple benchmarks could confuse investors, rather than help them”. Nonetheless, we have already begun analysis and are investigating options for multiple benchmark allocation within our reporting template.

Our third and final question concerned the display of the benchmark category. The fact that only 60% of those who responded stated that they would supply this information to third party data vendors and platforms, with 40% of this figure opting to limit this disclosure to their own fund literature, implies that there is a challenge with presentation, with the Asset Management marketing teams yet to decide how to practically report this information.

In order to support an easy transition for our clients, we will be adding a new field that will allow them to select their respective fund benchmark categories. In this way they will be able to easily and quickly add the categorisation information when they are ready.

If you are interested in finding out more about how we can help you with your data requirements please contact a member of our team on +44 117 980 9994 or by email and we will be happy to help.

Views, opinions or claims expressed on this website are those of the authors, and not necessarily the views of FundsLibrary. The content and information contained on the site should not be taken as advice. We accept no responsibility for loss incurred by any person on taking or refraining from action as a result of material contained herein.

All figures correct as at 31.12.2019.