Closet trackers: FCA reminder on transparency and treating customers fairly

The Financial Conduct Authority (FCA) has reminded firms about the importance of treating customers fairly (TCF) in the world of passive investing, by fining Henderson Investment Funds approximately £1.9m for TCF failings. 

Fund managers will already be aware of the FCA’s ongoing concerns around so-called "closet trackers" (passively managed funds that look and charge like active funds), so this FCA fine is a clear warning message to the industry that: 

1. investors must receive value for money and management fees must be commensurate with services provided; and 
2. generally institutional investors should not be treated differently to retail investors.