HAPPY HUMP WEEK FROM THE TOP CLASS WEDNESDAY UPDATE
Well, we made it through to halfway. Halfway through a year which, if it were an album, would absolutely be one of the Machine Head records where they bleached their hair, went all nu-metal and destroyed every bit of credibility they’d ever built up. Trust me, it’s been that bad. But we’re here. The druids […]
THE TOP CLASS WEDNESDAY UPDATE WANTS PAYING IN ADVANCE
Well, after last week’s sojourn away from financial services and into mental health awareness it’s back to earth with a bump. Incidentally, if you haven’t had a chance to watch our special HomeGames with Paul Feeney of Quilter then you can do that here. I will remember that session for a very long time and […]
THE TOP CLASS WEDNESDAY UPDATE LIKES THE CHEAP EGGS BEST
Week 478 in the Big Brother House, and tempers are starting to fray, as Nasty Nick spends all the housemates’ budget on an artisan-made 1kg chocolate egg, whereas Kinga and the rest of the housemates are keen to load up on Buttons ones. And if you think I didn’t have to look up the names […]
THE TOP CLASS WEDNESDAY UPDATE ONLY EVER LOST 9.9%
Another week in, and it seems forever ago that I was able to be a hermit because I wanted to be rather than being forced. Days of thunder, I tell you. My only wish is that, when all this is over, video conferencing by people hunched over laptops in dimly lit rooms becomes a thing […]
THE TOP CLASS WEDNESDAY UPDATE IS BACK TO LIFE
So, after last week’s intermission, normal service is resumed for TCWU. Or at least it would be if it wasn’t half term in Scotland. Boss man is on holiday in a top-secret location up North so for one week only, fresh from my own holiday, it’s down to me to deliver the weekly missive. Plenty […]
DEAR CEO: IT’S THE TOP CLASS WEDNESDAY UPDATE. YOURS SINCERELY, THE LANG CAT
No prizes for guessing what’s getting me out of the cat basket, bristling with Updating fervour this week. In fact there are never any prizes for guessing what’s getting me out of the cat basket, bristling with Updating fervour, so that pretty much makes this a normal week. Albeit one with an unusually straightforwardly titled […]
WELCOME TO THE NO FUN DECADE WITH THE TOP CLASS WEDNESDAY UPDATE
So here we are, and here it is, and I hope you managed to mark the passing of midwinter in the way that makes most spiritual and cultural sense to you. I personally learned some interesting lessons about what happens the next day when you let an 8-year old stay up till 4.15am on Hogmanay. […]
THE TOP CLASS WEDNESDAY UPDATE ISN’T WINDING DOWN
So here we are, siblings. Crunch time. In 48 hours we will know what our immediate futures hold. Will it be shame, and regret for what we’ve just done and the dishonour we have brought on ourselves and our forebears? Or will we hold our heads high and forge proudly towards the sunset on Friday […]
THE SEARCH FOR VALUE
Amidst absolutely no fanfare whatsoever 30th September saw the implementation of one of the main changes as a result of the FCA’s Asset Management Market Study. Over two years since the final report and getting on for 4 years since the terms of reference was issued, it’s fair to say it’s not been a speedy process, but finally, some of the biggest changes coming out of this study are finally live.
So, what has actually happened? All the new rules can be found in PS18-08 (itself published in April 18..), and centre around the issue of value for money. As of now, Authorised Fund Managers (AFMs) must publish a statement setting out a description of the assessment of value, either in the fund’s annual report or in a separate report. In either case, the statement must be published within 4 months of the end of the relevant annual accounting period. No big bang implementation, but these reports need to be published over the coming months. Value for money is subjective, however this is the criteria these reports need to assess….
1: Quality of service
The range and quality of services provided to unitholders.
2: Performance
The performance of the scheme, after deduction of all payments out of scheme property as set out in the prospectus. Performance should be considered over an appropriate timescale having regard to the scheme’s investment objectives, policy and strategy.
3: AFM costs – general
In relation to each charge, the cost of providing the service to which the charge relates, and when money is paid directly to associates or external parties, the cost is the amount paid to that person.
4: Economies of scale
Whether the AFM is able to achieve savings and benefits from economies of scale, relating to the direct and indirect costs of managing the scheme property and taking into account the value of the scheme property and whether it has grown or contracted in size as a result of the sale and redemption of units.
5: Comparable market rates
In relation to each service, the market rate for any comparable service provided:
(a) by the AFM; or
(b) to the AFM or on its behalf, including by a person to which any aspect of the scheme’s management has been delegated.
6: Comparable services
In relation to each separate charge, the AFM’s charges and those of its associates for comparable services provided to clients, including for institutional mandates of a comparable size and having similar investment objectives and policies;
7: Classes of units
Whether it is appropriate for unitholders to hold units in classes subject to higher charges than those applying to other classes of the same scheme with substantially similar rights.
COLL 6.6.20R (Assessment of value).
In addition to the above, over the next 18 months the AFM board will need to appoint two Independent Non-Exec Directors. And they will be covered by the Senior Managers Regime. This should focus the mind, especially for some of the potentially trickier points (4, 5, 6 & 7) above. Hands up if you’d fancy signing off, under SMCR, that your charges represent value for money relative to comparable services? For some funds this could be a difficult discussion…
Now, it’s very early days for this, and repeating the point made above there was never going to be a big bang implementation. These reports will be published as and when over the next 12 months. Having said that, the silence has been deafening. No material from the FCA to promote these changes, and especially to highlight what (if any) role advisers need to play. Should advisers be using these reports as part of their research and due diligence process? No one knows…
And surprise surprise there is no evidence (based on my google skilz) of fund groups publishing any material relating to these changes. Naively I had expected at least one fund manager to go early with these changes and take the moral high ground (“We’ve always strived to deliver VFM, so here we are…”) but as far as I can tell no one has. Move on please, nothing to see here as the .gif says
But despite the silence, this still feels like a huge change. The combination of the new rules, the reasonably prescriptive content of the reports, and the step change in internal governance should be a powerful one. So much so we’ve decided to devote the entire afternoon of our annual DeadX event on this very topic. We’ve lined up a great range of guest speakers all of whom will get into the detail of what value for money means for asset managers, advisers, platforms, NEDs and most importantly, customers. You can find full details at https://www.langcatlive.co.uk/ – over half the tickets are already sold, so don’t hang around. We’d love to see you there.
THE TOP CLASS WEDNESDAY UPDATE SAYS ONE WEEK TILL THE KIDS GO BACK TO SCHOOL
Oneweektilthekidsgobacktoschool Oneweektilthekidsgobacktoschool Oneweektilthekidsgobacktoschool Oneweektilthekidsgobacktoschool Not that it’s been a long summer or anything. Actually, it hasn’t. Time was that the financial industry would pack up and stop doing interesting things with all the enthusiasm of MPs heading off for a nice break with only about 10 weeks to go until the biggest constitutional shift in […]
