The Financial Conduct Authority is set to focus on making competition in the investment management sector “work effectively”.

In its Business Plan for 2017/18, the FCA explained that as the investment management market contains almost £7trn of collective, institutional and individual assets, its aim is to assist with making competition work well in order to generate the best possible income and returns for investors.

The FCA identified a number of key issues in the sector including weak price competition, weak governance, poor advice from investment consultants, poor liquidity management whereby risks of consumer detriment or wider disruptions to the financial system can arise and disorderly failure of investment portfolios and market abuse, among others. As over three quarters of UK households with occupational and personal pensions use the services of asset managers, the authority has noted that these must be addressed.

To tackle these concerns, the FCA is seeking to encourage firms to act in the best interests of their investors, earning customer trust; for investors to understand the objectives of the funds they are investing in and for funds to report their performance against appropriate benchmarks. In addition, for investment products to deliver value for money and for fund managers to remain responsible participants in the wholesale markets.

In order to directly address these areas, the FCA will be publishing the final report of its Asset Management Market Study this year and will continue to participate in an ongoing debate with national and international authorities around the liquidity management of funds.

“The size of this sector is significant and has a direct impact upon consumers, either through their retail investments or their pension funds. So it is essential that competition in this sector works effectively and this remains a priority area for us,” the report said.

“We will focus on the conduct of firms to ensure that markets remain clean and resilient.”

Investment Association chief executive Chris Cummings commented: "We support the focus of the FCA's Mission Statement and Business Plan on ensuring that the entirety of the UK's financial sector works in the best interests of consumers and society as a whole… As we move into a post-Brexit world, it is vital that the UK regulatory framework continues to foster a globally competitive environment to set up and run an asset management business."