Last week the regulator sent letters to the chief executives of a number of asset management houses, asking them to explain how their companies manage potential conflicts of interest by no later than 28 February 2013.
The letters were sent after the watchdog visited 15 unnamed asset managers between June 2011 and February 2012. “We concluded that most of the firms visited could not demonstrate that customers avoid inappropriate costs and have fair access to all suitable investment opportunities,” the FSA said.
Outlining the IMA’s response, incoming chief executive Daniel Godfrey said the trade body will work with the FSA and the asset management industry to address the regulator’s concerns.
But he cautioned against believing that the whole industry has problems with its controls and stressed that different firms will need to respond in different ways, noting that the regulator discovered “a range of standards, from unacceptable to very good”.
“What the IMA can do is to draw up this blueprint saying ‘here are the issues you need to be addressing’. We will have examples of best practice and companies may just want to copy that across but people should not feel under an obligation to copy a standard format,” Godfrey said.
“Generally one size does not fit all – it’s never good to just say ‘tick all these boxes and everything will be alright’ because what you end up with is legalese [and] boilerplating.
“Different firms will have different structures and different ways of doing business which means they may need a different way of making sure they don’t inadvertently miss something important. They need the opportunity to think for themselves how they are going to ensure they manage conflicts of interest well.”
Godfrey added that the IMA’s first course of action will be to work with the FSA to determine what the watchdog considers to be best practice. It will then establish its controls blueprint for companies to consider implementing and work on a monitoring and disclosure system to ensure these are being applied in the appropriate ways.
He concluded: “We recognise the importance of the concerns that the FSA has expressed and regard it as a real priority to do something concrete that leads to a better world overall.”
