Mr Bailey, giving the keynote speech on MiFID II at the European Independent Research providers association, this week said MiFID II had nudged fund managers to bear the cost of research themselves in-house rather than passing it on to investors.

He said: “We estimate that the reduction in charges incurred by investors in equity portfolios managed in the UK was in the region of £180m in 2018.

“Assuming similar savings going forward, this equates to nearly £1bn over the next 5 years.”

Mr Bailey said fund mangers had moved to keep down the costs of research by using more technology but said 14 months on from the introduction of MiFID II the signs were positive.

The FCA has estimated that research costs, moved in house by fund managers, were now 20-30% lower than pre-MiFID II which was welcome but added that cutting costs even lower should not undermine the valuable role of research.

He acknowledge the important role that independent research plays in supporting asset management in the “allocation of capital across our economy.”

MiFID II has strengthened standards across financial markets and the investment firms that offer and intermediate services, he said.

MiFID II has helped the sector move from “bundled commissions” to a clearer separation by asset managers between execution and research payments.

One principle of the reforms is to ensure that portfolio managers act as “good agents” in the best interests of their client and that their discretionary investment decisions are not unduly influenced by third parties, he said.

The MiFID II changes were consistent with the FCA’s current focus, including its Asset Management Market Study.