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IMA responds to FCA research fee crackdown with eight-point plan

IMA responds to FCA research fee crackdown with eight-point plan

The Investment Management Association (IMA) has urged investment managers to only pass on research fees that are in clients' interests, as part of a review on dealing commissions. 

In 36-page document in reaction to a crackdown by the FCA on companies using dealing commission to pay for corporate access, the trade body highlighted eight key areas, split between clients and market, which need addressing.

The client

* The regime should operate in the best interests of investment managers' clients

* Investment managers should behave demonstrably as guardians of clients' best interest within that regime

* Any cost borne by a client should reflect an investment manager's honest, fair and professional assessment

* Investment managers should disclose to their clients in a timely and meaningful fashion any cost or fees relating to the consumption of research

Markets

* The research market should operate efficiently and transparently

* The market structure should ensure a wide range of investment managers have access to a broad spectrum of competing research providers and service offerings and does not raise barriers to entry

* Research providers should not discriminate in their supply according to other services

* The UK's regime for paying for research should not undermine the UK's international competitiveness.

'There are clearly challenges and conflicts inherent in the current business model and the IMA is open to radical change,' Daniel Godfrey (pictured), chief executive of the Investment Management Association said of the current dealing commission model. 

'But there are also advantages and we should make sure that we are not inadvertently losing something valuable by changing the model without a thorough assessment of all the factors.'

At the end of last year the FCA proposed banning fees paid to brokers by investment managers, an industry worth some £5.2 trillion.

'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,' FCA chief executive Martin Wheatley said in a statement at the time. 

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