Financial Conduct Authority (FCA) chief executive Andrew Bailey has said despite "big changes" already taking place in the area of fund fees, more work is required from the industry and the regulator.
Bailey (pictured) said the FCA wanted to "continue the dialogue on value for money" within the sector as part of recommendations made in its recent Asset Management Market Study.
Speaking at the Investment Association's annual dinner at Mansion House on Tuesday, Bailey said: "We see that there are big changes already happening in the world of fees, and now seems like the correct time to make sure what emerges is sensible and fit for purpose.
"But we do recognise the challenges and where more work is needed [and] we have further work under way.
"We want to continue the dialogue on value for money, and on what questions we should all be asking to assess whether what is being delivered does represent good value.
"We do not, for instance, want to incentivise short termism or fail to recognise the value of effective stewardship."
In June, the FCA published the final report of its Asset Management Market Study looking at competition in the sector. It found there are often "examples of poor value for money products in both active and passive strategies", hitting out at "considerable price clustering" on active management charges for retail funds, which have remained broadly stable over the last ten years.
Some groups have already moved to cut fund charges across asset classes, while others are taking a more radical approach.The most high-profile example of recent fee movement since the report has been from Fidelity, which earlier this month announced a "fundamental change" to its charging model. It will introduce a variable management fee for its active equity funds that will depend on their performance relative to a benchmark.
In his speech to the IA, Bailey also noted the importance of fee transparency - another key theme of the FCA's market study.
"We are asking management and boards to assess whether funds offer value for money for investors, and to do so on an annual basis," he said.
"Likewise, we have asked for greater transparency and clarity of fees and performance objectives, with good quality disclosure to investors on a regular basis.
"I think this should be part of ensuring that fee structures contain sensible incentives for managers."
Elsewhere, Bailey reiterated his commitment to ensuring open financial markets access following the Brexit vote and that "consumer protection and market integrity" can be effectively achieved despite the UK leaving the EU.
He said: "We recognise the principles for open financial markets which have long been recognised in goods trade, namely the Most Favoured Nation Principle, which has a very long history in Europe. It means not restricting free trade to regional trade blocs and not discriminating in the trade terms offered to other countries.
"To make that work for financial services like investment management requires regulation in the public interest which delivers equivalent outcomes and protection and embodies close co-operation and information exchange between the regulatory authorities.
"We have this now with EU partners, including through the common regulatory framework that has been put in place, but we also have it with other countries. We are ready to roll our sleeves up and continue to make open markets work effectively."
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