The financial regulator has unveiled new rules governing fund managers' use of 'soft commissions' and charges for their research and share dealing services.
In a statement at the end of last week, the Financial Services Authority (FSA) revealed that investment firms must now declare how payments from institutions such as pension funds are used.
The regulatory body aims to stop the use of 'soft commissions', whereby brokers provide services such as news streams for fund managers in exchange for regular business.
The new rules require fund managers' spending to be itemised in greater detail and restricts the use of commissions for services such as computer hardware and entertainment.
"The rules, combined with proposals developed by industry, address the lack of transparency associated with soft commissions and should promote improved management of conflicts of interest," the FSA said in a statement according to Reuters reports.
A government-sponsored report written in 2001 by Paul Myners, chairman of Marks and Spencer, heavily criticised the receipt of commissions by fund managers and urged the industry to be more transparent in order to avoid conflicts of interest.Click here to find out more about investments.
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