FCA proposes simplified AoV reporting requirements

As part of its latest quarterly consultation, the FCA has published proposals seeking to “reduce and simplify” the Assessment of Value (AoV) requirements for firms.

A key change under the proposals is the paring back of "detailed reporting requirements" in favour of a general requirement for authorised fund managers to include in the annual report a summary of the AoV and the conclusion of the assessment as to whether the charges out of scheme property are justified in the context of the overall value delivered by the scheme (alongside details of any remedial action in the face of poor value).  In the FCA’s view “these changes will have a real impact, reducing costs and saving time for asset managers to deliver on what’s important to their investors.”

Background
The FCA consider this to be part of the wider work to streamline requirements for firms, including its plans for a more proportionate regime for alternative asset managers.  

The latest proposals respond directly to stakeholder feedback on its July 2024 Call for Input which pointed out that the assessment of value (AoV) rules in the FCA’s Collective Investment Schemes sourcebook (COLL) go further than the requirements under the price and value outcome of the Consumer Duty, thereby creating an unlevel playing field.  The feedback also noted that the costs of the detailed annual public reporting requirements outweigh the benefits – and pointed out low investor engagement with the public reports.  

The proposals in detail
The FCA are proposing to remove many of the detailed reporting requirements in FCA handbook COLL 4.5.7R(8), COLL 8.3.5AR(5) and COLL 15.5.3R(5).  These will instead be replaced with the general requirement as set out above.  The existing rule allowing AFMs to publish the information required by COLL 4.5.7R(8), COLL 8.3.5AR(5) and COLL 15.5.3R(5) in a composite report will be retained, and AFMs will have discretion discretion to include other AoV-related matters (beyond the prescribed requirements) in their annual report, or a composite report, if they wish to.

In line with the proposed CCI framework, the FCA consider it proportionate to allow firms greater flexibility in terms of how to report – and firms will welcome the proposed simplifications.

Next steps
The consultation is open until 11 July 2025. Whilst no specific date has yet been identified, the expectation is that any changes would be in effect later this year.