FCA proposes rulebook reform to cut costs for advice firms

The Financial Conduct Authority (FCA) has proposed various reforms that would tailor requirements proportionately for asset managers, cut costs for firms and improve data to supervise the sector more effectively.

The FCA anticipates that these reforms will save asset managers £128m annually, primarily from simpler Fund Reporting for Asset Management Entities (FRAME) requirements.

The updated rulebook would modernise and simplify Alternative Investment Fund Managers Directive (AIFMD)-related rules dating from 2013.

A consultation by the regulator is also seeking to simplify remuneration rules for the relevant firms, which are solely regulated by the FCA.

It intends to replace overlapping remuneration codes with a clearer, more proportionate framework, while maintaining appropriate standards and safeguards.

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FCA executive director, markets Simon Walls said: “By tailoring the regime for UK asset managers, we can collect better data while also saving industry millions a year.

“With a sharp focus on proportionality, we can particularly boost freedom for smaller firms to find new ways to achieve the same high standards.

“The proposals are a practical example of the FCA’s strategy in action: becoming a smarter regulator, which is more efficient and effective, using proportionate data collection to better identify risk.”

The FCA is calling for feedback before making final decisions on these proposals.

The Association of Investment Companies welcomed the consultation, saying the reforms would make the regime more proportionate for investment companies.

Guy Rainbird, public affairs director at the AIC, said: “The FCA’s plans are wide-ranging and complex, but there is a lot to be positive about.

“The changes in size thresholds would mean that firms with net assets of up to £750m would be considered small AIFMs – a substantial increase from the current threshold of £100m.

“We are pleased to see the FCA recognise this by setting out a tailored approach for investment companies with lower requirements where AIFM rules duplicate existing standards.”