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Working Lunch Monday, 7 April, 2003, 13:07 GMT 14:07 UK
Regulator wants more transparency
Financial regulator flexes its muscles
The relationship between fund mangers and brokers is to undergo a shake-up under new proposals from the Financial Services Authority.

The regulator is calling for more transparency in the way fees are charged and the services they provide.

In a report into broker commissions, the FSA has targetted the so-called soft commissions -- the fees brokers charge institutional investors for research and other services.

These fees are usually bundled into the total charge for share dealing.

Under the new policy proposals fund managers will no longer be able to incur costs for services additional to dealing without the customer's express agreement.

These 'additional services' include things like market information technology and investment research which brokers provide to fund managers.

'Up to 40% of total commission spend is used to acquire services additional to dealing so it is important that investors are clear on how their money is spent' Gay Huey-Evans, Financial Services Authority.

The move is a direct result of the report by Paul Myners into the investment industry, and consultation on the proposals will run until the end of August.

In the meantime, some brokers have already started to separate payments for trading and research.

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Adrian Chiles talks to the FSA
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