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FCA: managers must show client benefit of dealing commission

by David Campbell on May 08, 2014 at 10:01

FCA: managers must show client benefit of dealing commission

UK investment managers must ensure that bank sell-side research implicitly provided in return for dealing commissions is directly related to client interest and costs, the regulator has said.

Saying the announcement would ‘reinforce the current rules and provide greater clarity’ the Financial Conduct Authority (FCA) denied it was making substantive changes to how it treats sell-side research and commissions, worth approximately £3 billion a year.

‘Investors should be confident that dealing commission is only used to buy execution or research services that deliver real value,’ said FCA chief executive Martin Wheatley (pictured).

‘These changes offer firms a real opportunity to show they put their clients first and strengthen the industry’s reputation for transparency.’

The FCA said managers would be expected to show ‘they are acting as good agents and taking proper account of investors’ interests,’ and that ‘clients are given easily understood information on the risks and costs of the service’.

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