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Asset manager failure - are you prepared ?

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Patrick Kelliher

Invesco’s recent £18m FCA fine [1] has highlighted the conduct risks facing asset managers, but conduct risks are just a subset of a wide range of operational risks run by asset managers. Could these make an asset manager insolvent ? and if so, what would be the impact on their clients such as insurers and pension funds ?

The £18m is one of the largest ever levied by the FCA, but it is not that significant in the context of the Invesco group, which had equity of just under $9bn (/ £5.45bn) at 31/12/2013 [2] i.e. the fine only amounted to 0.4% of group equity. It is unlikely the FCA would levy a fine that would push an asset manager into insolvency, but what is interesting about the fine is the failings that lead to. Invesco failed to communicate changes in risk profile of funds it managed to investors. This failure exposed it to compensation claims, but in this instance Invesco got off lightly with investor compensation of only £5m.

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