8 December 2025
If you are covering the discussion paper on ‘Expanding Consumer Access to Investments’ and its comments on regulatory differences between MPSs and fund of funds, please find below a comment from Andy Miller, investment director lead at Quilter:
“MPS has been a huge success story for the industry, and its growth has been nothing short of phenomenal, with the latest Nextwealth report showing the market has almost doubled in 3 years to £190Bn. Nevertheless, such growth should prompt the need for regulatory review to ensure the rules are working for all involved. The FCA is right to recognise that to most customers investing in a model portfolio service is akin to investing in a fund of funds or unitised offering. To a retail investor both offer access to a diversified portfolio and come with the same risks and opportunities, and as such they are naturally compared.
“However, the processes and regulation that underpin both are vastly different and as such it is good to see the FCA recognise the need to tighten this area of regulation up. Model portfolios are relatively easy to launch and this can be done at pace. However, the required disclosure and process requirements are currently not as large a burden as they are for fund of funds. With various distribution agreements thrown into the mix too, customers can find it hard to accurately compare the two structures. It would thus be a natural development to align the regulatory regime for both structures.
“The reference in today’s policy announcements from the FCA highlights where the regulator may be looking when it comes to its wider review of the industry. It is important that the growth of MPS is not stifled, but it is vital that standards are raised, and consumers know what it is they are investing in. Not all MPSs are created equally, so better comparison between them, and fund of funds, will ultimately lead to better customer outcomes.”
