The regulator has said that the asset management firms outsourcing parts of their investment process may be abdicating their responsibility to the consumer.
Ed Harley, head of the FSA’s asset management supervision department, said that it had found evidence of cases where gaps in the investment chain had caused consumer detriment.
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"We are concerned we are seeing a lot of outsourcing and we are looking at the contracts to see if they are actually working to reduce the responsibilities of the asset management industry. It is a very long value chain and that can lead to confusion. We are concerned there is no single party taking an overview of the whole process, which is particularly relevant to costs and charges," Harley stated.
The regulator was expressed disappointment at the fact that firms had not acted swiftly enough to remove conflicts of interest.
"This is a long-standing problem for the industry that we naively thought had been dealt with in the 90s and it hadn’t. You really have to get it right to make sure you are getting the best deal for consumers," Harley added.
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By GlobalData
