IMAGINE an industry where the average profit margins were 36%, where the regulator found little evidence of price competition and where the average person did not get the benefit of the lower charges available to the wealthiest customers. You would probably expect the regulator to throw a book the size of Thomas Piketty’s “Capital” at it. The industry’s executives ought to be as nervous as a very small nun at a penguin shoot.

But that has not happened with the report of the Financial Conduct Authority (FCA), Britain’s regulator, into the fund management industry. What the FCA proposes in terms of greater transparency of fees and better governance standards is fair enough. But one wonders how much difference it will make. The industry has reacted to the findings with equanimity.

Perhaps the most damning of the report’s findings is point 1.9

We find weak price competition in a number of...Continue reading