UK Fund Managers Brace For Commission Reforms

Attempts by British regulators to crack down on soft commissions and the practice of commission ‘bundling’ will have little impact on fund performance, according to a report by Greenwich Associates. None of the study’s respondents expect that the adoption of the proposed reforms will improve performance for their clients. ‘This is a startling result when one considers the time and effort that is being devoted to this issue in the United Kingdom at present,’ said Greenwich Associates consultant John Webster. The Financial Services Authority (FSA) aims to add more transparency to the way brokers charge fund managers for research and dealing services. The Greenwich study revealed that nearly two-thirds of U.K. fund managers have invested substantial amounts of time analyzing the implications of FSA Consultation Paper 176 for their institutions. Based on these results, Greenwich consultants questioned whether retail and institutional clients would be better served if these firms focused their attention on resolving the pension deficit and liability problems besetting corporate and public pension funds.

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