Fund managers now accountable under FSC standard
Financial Services Council (FSC) fund manager members are now subject to the new Internal Governance and Asset Stewardship Standard as of Wednesday.
Speaking at a media briefing, FSC chief executive, Sally Loane, said the standard would raise internal governance standards within the firms and would give transparency to investors.
“This is mandatory for our fund manager members and we have around 50 fund manager members who manage around 80 per cent of FUM [funds under management] in Australia,” she said.
“It’s open to all managers of FUM and all investment managers to sign up to, and we encourage them to do so even if they’re not FSC members.”
The standard requires a non-prescriptive disclosure, utilising a “comply or explain” rationale, where asset managers will, where relevant within their business practices, be required to either describe the policy underlying their practices or explain why they are not relevant to them.
Also at speaking the briefing, State Street Global Advisors head of Asia-Pacific, Lochiel Crafter said there was nothing controversial in the standard and “none of these policies that we’ve outlined in terms of internal governance would have anyone think ‘that’s going to be onerous to comply with’”.
Crafter said many asset managers would have had the standards implicitly done.
“From an investor perspective it also provides transparency on what they should expect to see. This is not due diligence but if your asset manager is not able to articulate policy or appropriate wording around these activities then investors have a right to ask why,” he said.
“In the past, it’s been a lot of about act in the best interest of investors and now we’ve been more explicit about what that means. That helps investors understand what does it actually looks like, ‘what should I expect to see inside my asset manager, what conduct or policies around conduct should I expect to see’.”
Recommended for you
Lonsec and SQM Research have highlighted manager selection as a crucial risk for financial advisers when it comes to private market investments, particularly due to the clear performance dispersion.
Macquarie Asset Management has indicated its desire to commit the fast-growing wealth business in Australia by divesting part of its public investment business to Japanese investment bank Nomura.
Australia’s “sophisticated” financial services industry is a magnet for offshore fund managers, according to a global firm.
The latest Morningstar asset manager survey believes ETF providers are likely to retain the market share they have gained from active managers.
