* FCA tells asset manager to repay customers
* Says only two of 30 businesses reviewed followed new rules
* Ready to back hardline reform to boost compliance
By Huw Jones
LONDON, July 10 An asset management firm has
been told to repay customers after using their money to settle
its market data bill, Britain's Financial Conduct Authority
(FCA) said on Thursday, in a crackdown on commission charges.
The watchdog's chief executive aknowledged that it is losing
patience with firms that fail to comply with stricter rules
imposed to help safeguard the UK's position as a leading centre
for asset management - a sector crucial to government efforts to
encourage more people to save for their old age.
British asset managers pay brokers about 3 billion pounds
($5.1 billion) a year in dealing commission, which is passed on
to customers, but FCA investigations found that many firms have
been using this as cover to get customers to pay for market data
and research of questionable value.
Only trading fees and useful research can be passed on to
customers as dealing commission, but the watchdog's CEO Martin
Wheatley said the review of 17 investment managers and 13
brokers found that only two investment managers were fully in
line with the new rules.
"We are in active discussion with one firm on redress for
clients after we found it used dealing commission to pay for
market data services in full, despite clear statements that this
was not consistent with our rules," Wheatley said.
Given poor compliance with the regulations, Wheatley said
that the FCA is now backing a European Union law to separate
research and trading fees to encourage greater competition and
Britain must comply with EU law in any case, but in the past
the watchdog had been willing to "work with the grain of an
"The UK is a global centre for asset management - to keep
this position it is crucial that investors are confident that
they get a fair deal," Wheatley said.
The Investment Management Association sought in February to
head off a tougher regime by issuing its asset management
members with guidance on dealing commission.
It said on Thursday that it is considering the FCA review
and remains committed to supporting a regime that operates in
the best interests of investors.
On Wednesday the FCA launched a wide-ranging review of
competition in wholesale financial markets, which will also take
in investment firms.
($1 = 0.5877 British Pounds)
(Editing by David Goodman)