* IMA pledges to put customers first, but no easy answers
* IMA says globally-agreed reform would be best
* FCA likely to set out changes in coming months
By Huw Jones
LONDON, Feb 18 (Reuters) - Britain's top fund managers pledged on Tuesday to be fully open with customers over how their money is spent on investment research in an attempt to limit a looming regulatory crackdown.
Managers pay brokers commission to cover trading fees and research, and are allowed to pass on these costs to their own customers, who already pay an annual management fee to the investment fund.
The Investment Management Association (IMA), whose members manage 4.5 trillion pounds in assets, set out eight measures to ensure that customers get value for money from dealing commissions.
"There are clearly challenges and conflicts inherent in the current business model and the IMA is open to radical change," Daniel Godfrey, IMA's chief executive, said in a statement.
Britain's Financial Conduct Authority warned last October that change was inevitable and launched a public consultation on proposed action.
The consultation ends next week but the outcome will not be known for at least a couple of months. The watchdog had no comment on the IMA's recommendations.
FCA Chief Executive Martin Wheatley is concerned that some asset managers stretch the definition of research to include using client commissions to pay for data vendors and arranging meetings with top company managers.
The FCA has estimated that anything up to 500 million pounds of dealing commission was spent in 2012 to arrange such meetings, known as corporate access.
It has proposed defining research for the first time and to exclude corporate access, which should be paid for by the fund itself. The IMA said its recommendations did not mention corporate access as the FCA had already made its position clear on the issue.
However, the trade body said the FCA's position had "unsettled" the market and could cause damage to the standing of Britain as a listing venue and global financial centre.
The IMA said it would improve transparency in how funds tell customers about research costs but that the creation of a "pure cash market" to pay for research would make it harder for new investment managers to set up shop and cut research coverage of smaller firms.
It urged the FCA to push for global reform to avoid Britain's funds sector being put at a disadvantage.