UK - NAPF CONFERENCE- The FSA has revised proposals on reforming soft commission and bundled brokerage arrangements following consultations with the industry and is likely to have another consultation shortly, said FSA chief executive John Tiner.
Tiner said that discussions with firms and their trade bodies had revealed that fund managers had not been “properly accountable” to their clients in the past.
Respondents to the consultation said that market-driven initiatives could deliver the necessary transparency and accountability and urged the FSA to allow time for the Voluntary Disclosure Code developed by the NAPF and Investment Management Association to become fully operational.
“The basic idea would be to show on a fund by fund basis the breakdown of commission payments between the costs of execution and the costs of additional non-execution services, principally investment research.”
He said such an approach could be promising in providing a basis for establishing market prices for investment research for both brokers and independent providers and this in turn could drive more efficient research purchasing decisions by fund managers.
Tiner added that disclosure by itself would not address all the conflict of interests identified in the consultation paper.
“A crucial issue is how far trustees and their advisers could, or would use the extra information to challenge their fund managers to exercise greater discipline, to ensure they get good value for money in the services they buy on behalf of their clients.”
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