The Financial Services Authority (FSA) is set to levy multimillion-pound fines on asset managers for using clients’ money to get access to companies.
According to the Financial Times, the regulator has found that asset managers are spending “tens of millions of pounds” to get access to company chief executives, often paying brokers to set up meetings.
Ed Harley, head of asset management supervision at the FSA, told the paper that the regulator’s analysis of the use of client money by 15 asset managers had found large payments that were “hard to justify”.
The payments break the rules set up by the FSA that clients’ money should only be used for trade execution and research.
Mr Harley told the Financial Times: “When we challenged firms as to how they can justify [payments for corporate access] they couldn’t give us a coherent answer that met those criteria.”
The FSA’s findings come after the annual Thomson Reuters Extel Survey found that 29 per cent of the dealing commissions received by European asset managers was being used for access to companies, a rise from 21 per cent in 2010.
