LONDON, May 8 (Reuters) - Investment managers will be barred in Britain from using customer money to arrange interviews with top executives of companies they may invest in, the Financial Conduct Authority said on Thursday.
The FCA said stricter rules on how managers spend the 3 billion pounds ($5 billion) a year in commission they pay brokers will come in on June 2.
Managers can continue to use commission, which is passed on to customers, to pay for costs related to executing trades or for research into stock picks.
However, some managers were also using commission to cover payments for "corporate access." That meant it included a fee for the broker to arrange meetings with the chief executives of companies the managers might want to invest in. The practice will now be banned.
The watchdog has estimated that anything up to 500 million pounds of dealing commission was spent in 2012 to arrange such meetings. The new rules emphasise that costs for research can only be passed on to customers if they lead to a "meaningful conclusion".
"Investors should be confident that dealing commission is only used to buy execution or research services that deliver real value," FCA Chief Executive Martin Wheatley said in a statement.
"These changes offer firms a real opportunity to show they put their clients first and strengthen the industry's reputation for transparency," Wheatley said. ($1 = 0.5894 British Pounds) (Reporting by Huw Jones; Editing by Larry King)