FCA flags concerns over asset managers' 'high' and 'sustained' profits

Study into asset management competition

The Financial Conduct Authority (FCA) has said the high and consistent profit margins seen within the asset management industry are another factor for the regulator to conclude competition is "weak" in the sector.

In its Asset Management Market Study published this morning, the regulator said competitive forces cause an industry's operating margins to fluctuate from year to year, but the profits seen among asset managers have been "significant" and "over a sustained period", indicating that competition is not working effectively. Data from the paper showed the money-weighted average operating margin across a sample of 16 fund management firms was between 34% and 39% from 2010 to 2015. It said trends between the firms was variable, but over the period for half the sample operating margins were "...