Survey reveals asymmetry between the confidence that asset managers have, and the internal resourced allocated, to financial controls


AutoRek, the leading financial data management provider, has issued a strong warning for asset managers to adopt a more proactive approach to financial controls after its survey into financial controls revealed that nearly a third (28 per cent) do not have a procedure in place for managing a critical breach. The research indicates that there is an underlying risk among asset managers who would be likely to detect significantly more breaches if rigorous procedures were in place.

The results show that 91 per cent of asset managers are currently convinced that they have enough resource allocated to managing the financial controls agenda. However, the survey – spanning financial services professionals in the asset management, banking, foreign exchange, insurance and stockbroking sectors – demonstrates that asset management is the sector most likely to fall victim to a critical breach in processes. In the past 12 months, nearly one in 10 (9 per cent) of asset managers admitted experiencing a fault in the financial controls function.

Jim Muir
Jim Muir

Jim Muir, director of AutoRek, comments on what the results reveal:
“The Financial Conduct Authority has already highlighted the central role that asset management could play in the non-bank financing of the UK economy. Yet, before asset managers can assume responsibility for this role, the sector needs to build on principles-based guidelines that governed activity during the pre-crisis era and develop more rigourous and granular financial controls. Instead, there is a need for the industry to place more focus on the proactive prevention of breaches, rather than on detection and correction. Only then can the sector continue growing and play a fundamental role in the UK’s recovery.”

Despite the lack of official processes for dealing with breaches, the research does highlight that asset managers recognise the importance of financial controls in helping to eradicate industry losses. The fragility of margins in asset management means that the impact of a breach in financial controls could be more significant and any mistake could wipe out large amounts of income and profit. As a result, 69 per cent of asset managers claimed that the financial controls agenda is a help to their business and its growth, with 66 per cent listing more rigorous profit and loss control as the most important area of the financial controls agenda.


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