The Financial Conduct Authority has published new guidance to ensure fund managers have clearer objectives when managing members' savings.

The FCA’s next steps, published today, recommends making it a requirement for fund managers to make an annual assessment of value and appointing two independent directors to their boards.

It is the second consultation the FCA has published on the back of it asset management market study released in June 2017, in which it also advocates a clearer use of benchmarks.

In addition, the FCA recommended introducing a new responsibility under the senior managers and certification regime to increase accountability, and a number of technical changes to improve fairness around fund sales.

FCA executive director of strategy and competition, Christopher Woolard, said: “The investment choices open to people, and the decisions they make on how to invest, can have a profound impact on their financial health.

“They can also have consequences for their families, as well as society as a whole. That’s why it is important the asset management industry, which looks after the savings of millions of investors, is working as well as possible."

Woolard added that the original market study found evidence of “weak price competition” in a number of areas.

“Today’s announcements are an important part of a package of measures that, combined, aim to achieve a fair, transparent, open and accountable market”, he added.

The consultation was in response to calls from “actively engaged investors” who did not find it easy to choose a suitable fund.

A further consultation will be published which aims to make it clearer when funds are benchmark-constrained or where a fund uses one or more benchmarks.

The Pensions and Lifetime Association policy lead for investment and defined benefit, Caroline Escott, welcomed the FCA's new proposals, commenting: "The ability of investors to scrutinise their investment managers and hold them to account on the value of the service they provide is necessary for a well-functioning market.

"We had supported the FCA’s proposals to ensure AFMs are fully accountable on value for money and are pleased that the FCA has decided to redraft its rules in a way which will focus on the full value proposition; cost transparency is vital but it is important to avoid a ‘race to the bottom’ on costs and we must instead encourage investors to focus on the broader value for money they receive."

The PLSA said it also believes in an "independent presence" at board level, saying that it hoped the 25 per cent level would increase over time.

The FCA also published its Occasional Paper, a behavioural research piece looking at how different ways presenting information about charges affects investor’s decision making.

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