Financial Services (FS) has always been an industry that is heavily regulated. However, recent updates from the Financial Conduct Authority (FCA) mean that for companies within FS – particularly asset managers – the governance spotlight is going to get a lot brighter.
Last year’s introduction of the senior managers and certification regime for banks, building societies and insurers, has already had an increased regulatory impact on both firms and individuals, and it is still yet be rolled out to all regulated firms.
When you also factor in a recent FCA study that highlights just how concerned the FCA is about the effectiveness of governance within the asset management industry, it is clear that greater transparency and openness will be key qualities in the industry moving forwards.
The FCA asset management market strategy
This FCA study was published at the end of 2016, and amongst other things, looked at how asset managers compete to deliver value and the management of costs and quality in the supply chain. The findings of the study are currently being used as part of a consultation process, but some of the suggestions will cause senior managers to sit up and take notice.
In a nutshell, the FCA is saying that that firms need to be able to demonstrate how their funds deliver value for money. This in turn means that asset managers will face a much stronger duty of care to prove and demonstrate that they are working in the best interests of their clients.
Such measures will be monitored in three main ways. Firstly, the structure of existing governance bodies will be changed to create more independence. Secondly, a new structure, much similar in style to that of US mutual funds will be introduced and finally, a new governance body will be created to oversee this.
These measures are still in discussion but do look highly likely to take place, something to bear in mind as preparations for the senior managers and certification regime (to be rolled out fully by March 2018) continue.
Organisations can prepare for the increased governance requirements by shining a light on their own senior decision-making. Most organisations have nothing to fear and it is a question of demonstrating transparency into decision-making, fees and charges.
There are many ways to begin approaching this, but deploying an online board portal is a smart way of getting started. eShare’s solution BoardPacks, allows an organisation to not only manage its meetings much more effectively, but also to securely store governance documents online. Crucially, it can also easily share that information with external parties such as governance bodies and auditors, immediately demonstrating the transparency that will be required in the light of the FCA’s new measures.
eShare began life as a company that worked with pensions providers, and it’s a sector that we still know extremely well, working with many of the world’s most prominent funds organisations, banks and other FS providers.
So if you are interested in hearing how we can increase board level transparency and improve governance in the light of the increased regulation, we’d be more than happy to talk.
Drop us a line at firstname.lastname@example.org or give us a call on +44 (0) 845 200 7829.