Reed Smith Client Alerts

The Financial Conduct Authority (FCA) has issued statement of objections against a number of asset management firms. This is the first case the FCA has brought using its competition enforcement powers (inherited in 2015), which it concurrently enforces along with the Competition and Markets Authority (CMA). The FCA is, in fact, one of the only financial regulators in the world to have both financial regulatory and antitrust powers.

Through this investigation, the FCA has shown evidence that it is prepared to use its ‘soft’ enforcement powers and mechanisms, such as ‘on notice’ procedures, to investigate and intervene in the asset management sector. This may potentially impact other financial sectors, as the FCA continues to grow in its aim to enforce competition law.

This investigation comes at the same time as the CMA launches an investigation into investment consultancy and fiduciary management services, initially investigated by the FCA. Such cases demonstrate that the financial services sector is in the spotlight with respect to competition compliance, which may force the industry to review and adapt its industrial norms and strategies.

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Asset management firms

Introduction and procedure

The Financial Conduct Authority (FCA) has issued Statement of Objections to the asset management firms: Artemis Investment Management LLP, Hargreave Hale Ltd, and River and Mercantile Asset Management LLP (the Firms).

A Statement of Objections is a document that sets out why and how the FCA thinks the relevant firms have infringed applicable competition law. It outlines the facts on which the FCA relies, the objections it raises, the actions it proposes and its reasons for its proposed actions. It is a provisional finding and does not necessarily lead to an infringement decision. It simply gives notice to firms that the FCA suspects they have infringed competition law, allowing the parties to respond by making written and oral representations. The final decision regarding any infringement is taken by a three-member Competition Decision Committee unconnected to the case investigating team and not involved in the decision to issue the Statement of Objections. Firms that are found to have breached competition law face a fine of up to 10 per cent of annual worldwide group turnover.