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Fund managers pledge openness on client fees

Britain's top fund managers have pledged to be fully open with customers over how their money is spent on investment research in an attempt to limit a looming regulatory crackdown.

Managers pay brokers commission to cover trading fees and research and are allowed to pass on these costs to their own customers, who already pay an annual management fee to the investment fund.

The Investment Management Association (IMA), whose members manage £4.5trn (€5.4trn) in assets, set out eight measures to ensure that customers get value for money from dealing commissions.

"There are clearly challenges and conflicts inherent in the current business model, and the IMA is open to radical change," Daniel Godfrey, the IMA's chief executive, said in a statement.

Britain's Financial Conduct Authority warned last October that change was inevitable and launched a public consultation on proposed action.

The consultation ends next week but the outcome will not be known for at least a couple of months.

The watchdog had no comment on the IMA's recommendations.

FCA chief executive Martin Wheatley is concerned that some asset managers stretch the definition of research to include using client commissions to pay for data vendors and arranging meetings with top company managers. (Reuters)

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