FCA amends use of dealing commission rules

The Financial Conduct Authority (FCA) has published a policy statement containing its final rule changes on the use of dealing commission. The amendments come into force on 2 June 2014 and substantially reflect the changes on which the FCA consulted. While the FCA states that the changes simply serve to clarify existing rules, investment managers and brokers may find that the detail of the rules does not necessarily reflect current practices and should review their internal policies and procedures accordingly. In particular, the amendments make clear that firms may not use dealing commission to pay for access to senior staff at investee firms (corporate access) and also clarify which costs firms can pass on to their clients through dealing commission, including specific guidance on mixed-use assessments, where substantive research (which may be paid for from dealing commission) is bundled together with ineligible services (that firms cannot pay for using dealing commission).

Reflecting the general push by the FCA to ensure firms put the interests of their customers first, the FCA believes that the changes may result in a reduction of costs passed on to a customer’s fund and an improvement in transparency of an investor’s dealing commission costs…

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