Wed, 30/10/2013 - 13:27
Martin Wheatley, chief executive of the Financial Conduct Authority (FCA), has called for greater transparency to boost the reputation of the asset management sector.
Wheatley also wants to see a frank and open discussion on how and where dealing commission is spent.
The FCA will be consulting with asset managers to see what changes need to be made to the existing regulation, which have been in place since 2006. A specific concern is that some asset managers are pushing the definition of “research” by using client commissions to cover non eligible costs and services.
Speaking at the 2013 FCA Asset management Conference, Wheatley said: “This is a critical period for the industry; a crossroads. So today we ask some challenging questions. Are we internationally competitive? Are charges and fees transparent? Are there inherent conflicts within the system? Today we start a debate.
“We need to be confident that managers are putting their clients’ value for money, good returns, and transparency at the heart of how they do business. Then the discussion is about how best to get there – is evolution enough or do we collectively need to be more revolutionary?”
According to Wheatley the FCA will be working with the industry to develop a proportionate regulatory solution. The roadmap for change will include:
• Working with asset managers in the UK and policy makers in Europe to find a balanced regulatory solution;
• Launching a consultation paper in November to clarify rules on research, including guidance around corporate access; and
• A thematic review that follows up on the FCA’s earlier work looking at conflicts of interest within asset management.
The FCA’s concerns about transparency are shared by industry practitioners and representatives, including the Investment Management Association (IMA).
IMA chief executive Daniel Godfrey says: “The IMA has been conducting a significant review of this market for some months and we expect to be able to report our conclusions early in the New Year. Our clear objective is to ensure we deliver the greatest possible value for money, transparency and accountability to our customers and we will explore all possible avenues to make sure we do just that.”
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