Phase one of the FCA hub will be launched next month

Phase one of the FCA hub will be launched next month

The UK’s Financial Conduct Authority (FCA) is setting up an asset management authorisation hub to support start-ups entering the lively market.

In a speech at the “FT Investment Management Summit Europe 2017”, Megan Butler, executive director of supervision – investment, wholesale and specialist, FCA, says the hub will help start-ups as they move between pre-authorisation and authorisation, and on to regular supervision. She points out that last year it approved 204 new firms in the sector.

The hub will clarify expectations, offer a portal for investment managers on its website, and it wants more engagement between the FCA and market entrants.

Phase one of the hub will be launched next month – at which point it will offer new firms pre-application meetings, case officers and access to the website portal.

Next year, the FCA intends to include support, like quarterly surgeries and online booking for pre-application meetings.

Butler says: “I do want to make it clear though that the authorisation hub is not designed to lower entry standards to the market. We have no intention of presiding over a decline in quality.”

Sweet and sour

As is common with any FCA speech, Butler praised the audience to high heaven as a prelude to something less rosy.

If you love stats, and sweet words, she says asset management firms “curate” a 12% share of global assets under management (AUM); the industry has created around 92,000 UK jobs; and 11 million people are invested in products like stocks and shares ISAs. All absolutely lovely.

However, (which we all saw coming), Butler adds: “That said, our interim ‘Asset Management Market Study’ outlined a number of issues in the market. Not all of it made easy reading.

“But the topline is that we found powerful evidence of weak price competition in the industry – with no clear link between price and performance.”

So to fix all this, the FCA did the routine consultation and now has some proposals. These include independent directors on fund governance boards; and a requirement to return risk-free box profits to funds.

It also recently referred the investment consultancy sector to the Competition and Markets Authority (CMA), which wants submissions in response to its issues statement by 12 October 2017.

In the meantime, the FCA will prepare a second consultation. It can feel like the consulting never ends with these regulators.


As reported in March, the FCA set out its plan for improved banking standards and financial services with its new “Senior Managers and Certification Regime” (SMCR) – with the idea to bring responsibility and accountability (to people who really should know this already).

Butler says the FCA wants to roll out the SMCR to “pretty much every firm that offers financial services, and is regulated by the FCA”. Over the summer, it will ask feedback and is looking for responses by 3 November 2017.

Exactly two months after that of course, MiFID II comes into operation. Butler did a lot of reminding, but she did “stress that legal entities that want to trade under MiFID II will need a legal entity identifier” and the “process is not particularly expensive or complex”.

By the way, in the speech, Butler noted: “Towards the end of his presidency, Ronald Reagan quipped that Government’s view of the economy could be summed up as: ‘If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it’.

“As you might imagine, we don’t tend to see our role that way. Rather, we see robust regulation as fundamental to the future success of financial services.”

The last sentence is in almost FCA speech. Britannia never waives the rules.