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One month to go until new Assessment of Value reporting requirements come into effect

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With the FCA’s Policy Statement PS18/8 due to come into effect from 30 September 2019, Authorised Fund Managers (AFMs) will need to publish Assessment of Value reports from the end of January 2020 (within four months of their funds’ year-end).

Designed to provide greater transparency for investors, PS18/8 requires AFMs to publish a breakdown of their funds’ quality of service, performance, costs, any economies of scale they may have been able to achieve, market comparisons with regards to services and rates and whether investors are in the most appropriate classes of units. They must subsequently be published annually at the minimum, with responsibility falling on the fund board or governing body.
A recent roundtable hosted by international data and technology provider Financial Express (FE), provided an overview of Assessment of Value and the impact it is likely to have on the industry.
Mikkel Bates, Regulatory Manager at FE, says: “PS18/8 was published in April last year, bringing with it a range of new requirements, including necessitating AFMs to conduct a deep review of the funds they offer and the information they publish. If they have not done so already, AFMs need to put in place procedures immediately to ensure they have all the necessary information at their disposal in time for their deadlines.”
Despite the imminent introduction of Assessment of Value, the roundtable revealed that there remains a degree of ambiguity about Assessment of Value and, in particular, unanswered questions in relation to benchmarking and market comparisons.
Bates adds: “It is clear that AFMs still have a number of queries with regards to what is required of them. The FCA’s obligation for Assessment of Value reporting focuses on increasing transparency and justifying costs, but when it comes to practical application, there are still some grey areas.
“Further clarity is needed on some areas of the requirements. For instance, with peer groups and market comparisons, AFMs are required to publish their fees based on comparable market rates, but when the breakdown of competitor information is seen as commercially sensitive, the question remains as to how AFMs can obtain the information they need to compare their own fees.
“Additionally, there are outstanding questions in relation to how the industry will use this information. There are no set requirements around how Assessment of Value reports are displayed and no templates for AFMs to work with. At this moment, the application of the finer details is fairly loose, but we hope that in time, best practice will emerge to help AFMs meet their obligations.”

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