* 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 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
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
"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
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
It urged the FCA to push for global reform to avoid
Britain's funds sector being put at a disadvantage.