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'A critical period': Martin Wheatley's speech on fund charge conflicts
on Oct 30, 2013 at 11:25
There are obviously two sides to the dealing commission coin and, for these issues to be tackled effectively, to reach consensus it will also need to include the sell side.
How we propose to work together to address these issues
And that is where the debate starts. 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?
We clearly need to continue to engage at a European level on this debate. The changing EU regime is in development and we have engaged and influenced the Markets in Financial Instruments Directive (MiFID) for example from the outset. We can’t be the lone voice, the IMA is heavily involved and as an industry and we need you to engage.
Any solution has to apply the new regulatory framework. But most importantly, a solution driven by strong industry representation and informed by its expertise will benefit everyone.
I’ve mentioned MiFID, this is our main vehicle through which to negotiate. In principle, we support an approach that applies across Europe so if the end destination becomes un-bundling for example, then this would apply unilaterally across asset management in Europe.
The advantage of progressing this at European level is that it will ensure a level playing-field and allow firms to adapt their business models as implementation is unlikely to occur before 2016. We see this as an essential long-term solution to remedy this issue, which isn’t by any means a UK-specific problem.
However, the outcome of EU negotiations is still very much open. As this continues to unfold we remain open to considering all options that could achieve comparable improvements to transparency, efficiency and competition for research.
But is this enough? Reputationally, there is too much at stake to just wait for a European solution. We’ve led the way internationally through our ability to change, innovate and adapt to new trends and practices.
So today we open a domestic debate on the need to reform the use of dealing regime, particularly the use of dealing commissions, and how industry practice can be improved now to the benefit of all.
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