FCA to investigate ‘conflicts of interest’

The FCA is launching a consultation into the way asset management firms use client fees to pay for research.

The fresh review of fund charges and conflicts of interests will “face up the elephant in the room”, according to Martin Wheatley, chief executive of the regulator. Speaking at the FCA Asset Management conference, he added fund charges and commission are issues that “need to be addressed”.

Mr Wheatley announced the FCA paper – scheduled for November but not launched at time of press – will “clarify rules on research, including guidance around corporate access,” and will conduct a thematic review looking at “conflicts of interest within asset management”.

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Mr Wheatley added the FCA is not there to write the headlines, but “to start a mature and sensible debate”.

Funds will be authorised much faster in a bid to increase the UK’s competitive edge, according to the regulator. Clive Adamson, the FCA’s director of supervision, said the fund authorisation process will be sped up starting from next year.

He also said the regulator is targeting reducing the process for non-Ucits funds to three months and qualified investment schemes to two months, by April 2014.

The current statutory timeframe for these schemes is a maximum of six months. Ucits will also be cut down to six weeks. It also pledges to further cut the time by April 2015.

Mr Adamson added that the plan is aligned to support the industry and to “make the UK an attractive place to do business”.

The regulator’s approach is to focus on the role of asset managers as trusted agents, he said. “We want to strike a balance and encourage responsibilities.”

Ed Harley, head of the asset management department at the FCA, said, “We want to reduce the targets materially. We need to make a run quickly and reduce any ‘dead time’.

It is all part of a broader effort to launch funds.”