FT Article : Shake-up on charges for UK asset managers

Britain’s financial watchdog will on Wednesday pledge a shake-up of the opaque way asset managers pass costs on to their clients after it uncovered “inherent flaws” in the existing system.

Martin Wheatley, the head of the Financial Conduct Authority, will tell a conference that existing rules on how fund managers spend their clients’ cash are failing to bite effectively and are likely to be tightened.

The broader system of fund management charges also lacks transparency and wider reform may be needed to impose discipline on the costs the £5.4tn sector passes on to clients, he will warn in a speech in London.

The words come amid controversy over the murky system of dealing commissions, with clients complaining that it is unclear what exactly they are paying for.

Under existing rules, fund managers are allowed to include the cost of third-party research – which the FCA estimates totalled £3bn last year – in commissions. But some campaigners want asset managers to pay the charges from their own resources rather than taking it off clients, or to add it to their headline annual management charge.

For the full FT article see:             Shake-up on charges for UK asset managers

By Sam Fleming and David Oakley

October 29, 2013 11:51 pm