The transition management industry does not warrant large-scale Financial Conduct Authority (FCA) intervention despite State Street being fined almost £23m for overcharging clients.
Transition management - the process of transferring funds between investment managers, markets and products - sees a total of £165bn a year moved for clients such as pension funds. There are 13 providers in the market.
The FCA said bad practices in transition management could potentially affect the returns "enjoyed by millions of consumers on their investments".
After the first review into the sector, the FCA has advised providers to ensure their controls, oversight and governance arrangements meet regulatory requirements.
FCA director of supervision Clive Adamson said: "Transition management often flies below the radar, but done properly, helps to ensure that investors get the best returns on their assets. By taking a proactive look across the sector, we've acted to ensure that standards are high and the consequences of failing to meet our expectations are clear."
He said firms, broadly, met FCA requirements. However, the "quality and effectiveness of controls, marketing materials, governance and transparency varied".
The FCA, has provided specific feedback where needed, and will continue to monitor the conduct of providers.
It said where firms fall short of requirements "we will not hesitate to take action".
"Often, the pension funds or other clients commissioning transition management services are unfamiliar with the process.
"As a result, they may not be aware of potential conflicts of interest, or understand how the way the transaction is being carried out could affect the value of their assets," said the FCA.
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