The Financial Conduct Authority has published new rules on the duties of fund managers and is launching a consultation on proposed rules and guidance for improving fund information for investors.
The rules and consultation follow the FCA's June 2017 final report of its asset management market study.
The rules and guidance mean fund managers will, have to "make an annual assessment of value, as part of their duty to act in the best interests of the investors in their funds." Companies will have 18 months to begin doing this.
They will also have to appoint at least two independent directors to their boards in the next 18 months, and there is a new "prescribed responsibility" under the Senior Managers and Certification Regime introducing individual accountability.
Technical changes have also been designed, to "improve fairness around the way in which fund managers profit from investors buying and selling their funds" – companies have 12 months to implement this – as well as to make it easier for investors to move into cheaper share classes.
"These measures will deliver better protection for all investors, both those who are actively engaged with their investments and those who don’t follow their investments closely," said the FCA.
A further consultation is aimed at making funds provide better information about what they are offering. The proposals put forward by the FCA include "how fund objectives can be expressed more clearly and be more useful to investors", as well as making it clearer when funds are limited in how far their holdings can differ from a benchmark index.
The FCA also wants to make sure "that where a fund uses one or more benchmarks, this is disclosed consistently and explained to investors".
The FCA has also published a paper presenting results of behavioural research.
Christopher Woolard, executive director of strategy and competition at the FCA, said: “The investment choices open to people, and the decisions they make on how to invest, can have a profound impact on their financial health."
He said the new rules and consultation are "an important part of a package of measures that, combined, aim to achieve a fair, transparent, open and accountable market”.
Andy Agathangelou, founder of campaign group the Transparency Task Force, welcomed the FCA's news.
He said regulators globally should follow suit: "What now needs to happen is that these positive developments must be adapted and adopted globally, because the problems they tackle are truly international in nature."
