The announcement comes at a time when the UK's asset managers are steering their businesses through a complex regulatory environment.

The UK’s financial services watchdog will set up a new hub next month to ease entry to market for budding asset managers, helping them navigate an already complex regulatory regime that is set to be bolstered by a raft of incoming rules. 

Last year, the Financial Conduct Authority approved 204 new asset managers, and has since learned that “some of those businesses find it difficult to navigate regulation,” said Megan Butler, executive director of supervision - investment, wholesale and specialist at the FCA. 

The regulator’s contact centre takes up to 1,200 pre-and post-application calls a month from investment managers seeking clarification on various compliance issues, she added. 

“We do see it is an imperative that the best investment managers aren’t put off of operating in the UK by avoidable barriers to entry,” Butler said. “So… the FCA is setting up an asset management authorisation hub to support new entrants to the market.”

The so-called "phase one" of the hub will launch next in October, and will see the FCA offer new players pre-application meetings, “dedicated” case officers and access to an online portal. Once authorised, firms will more easily be able to directly liaise with supervisors, Butler said. 

Next year, the FCA intends to extend the hub’s offering to include quarterly surgeries and an online booking centre for pre-application meetings. 

Regulatory red tape
Plans for the new hub come as UK asset management houses are readying themselves for a wave of new regulations, such as MiFID II, GDPR and the FCA’s Senior Managers Regime, all of which will hike compliance costs and increase regulatory pressures once they take effect next year. A concern has been that while these regulations can be defended - depending on one's point of view - as ways to protect the end-investor - they also raise barriers to entry into the financial sector, tending to work in the interests of incumbent firms at the expense of new ones.

A recent survey carried out by Liquidnet found that just 6 per cent of asset managers were ready to meet best execution requirements imposed under MiFID II. The European directive aims to inject more transparency into Europe’s investment management sector and will require money managers for the first time to separate the costs of research from trading and management fees as of 3 January, 2018.

“I am conscious that MiFID’s new reporting requirements do place an onus on firms,” Butler said. “In the meantime, I want to make it clear that we will take a sensible and proportionate approach to MiFID [II]’s introduction.

“We have no intention of taking enforcement action against firms for not meeting all MiFID II requirements straight away, if there is evidence they have taken sufficient steps to meet the new obligations by the start date, and that there are plans in place to complete the process.”

She said that “the range and depth” of data the FCA will receive from January will improve its ability to monitor the market, helping it “spot abusive practices earlier”. 

She also acknowledged concerns from firms with cross-jurisdictional operations about potential conflicts arising from MiFID II.

“I know there is a question mark hanging over firms that are registered as broker dealers in the US and other territories – and who can’t accept payment for research, without also applying to become an investment advisor,” Butler said. “Let me assure you that we are fully aware of this issue, and we are in close contact with colleagues in the EU and US, who are working on a solution. So please watch this space.”

Butler also gave a nod to the FCA’s plans to extend its Senior Managers and Certification Regime (SMCR) to nearly all licensed operators, including wealth and asset managers, in a bid to hold senior managers accountable for failings on their watch.

“We see personal accountability as fundamental to the future of financial services,” Butler said, adding “we are sensitive to the fact the roll out [of the regime] will affect firms of many different shapes and sizes.”

The FCA’s announcement in July that it planned to extend the rules, which banks have had to comply with since last March, to all financial institutions sparked fear among wealth and asset managers. There have been reports that fewer people have been willing to take on more senior roles because of the additional liability.

Butler’s comments followed a recent study by Allen & Overy and Willis Towers Watson, which found nearly half of senior executives were unaware of the FCA’s intention to extend the regime to the entire financial services sector. 

Some 43 per cent of 127 respondents did not know about the plans.