The asset manager’s Australian parent company, BT Investment Management, revealed the investigation regarded payments made between 2006 and 2016 in its annual results on Thursday.
It follows a review by the FCA in which the regulator found the “majority” of firms fell short of its expectations when it came to dealing arrangements.
How firms assess whether research is substantive, how they attribute a cost to research if is received in return for dealing commission and how they record their assessments to demonstrate they are not spending more customers’ money than necessary were all falling short of standards, the FCA found.
At the time of the original review in March this year, the FCA said: “We identified poor practices at the majority of firms we visited and several could not demonstrate meaningful improvements in terms of how they spend their customers’ money through their dealing commission arrangements.”
In its results, BT Investment Management confirmed an investigation had been opened.
“JOHCM is the subject of an investigation from its regulator relating to the eligibility of certain services approximating AUS$8.6m paid for out of dealing commissions between 2006 and 2016,” it said.
“It is possible that as part of the investigation the eligibility of other services may also be assessed.
“The likely outcome or consequence of this matter (including any sanctions or penalties) is unable to be reliably estimated at this time.”
In a statement JOHCM said: “We confirm that the FCA is conducting an investigation in relation to the eligibility of certain services paid by JOHCM out of dealing commissions between 2006 and January 2016. This follows dialogue between JOHCM and the FCA as part of an industry-wide thematic review in 2015. The total cost of the services whose eligibility is currently being specifically examined is around £5m over the course of the 10-year period under review.
“We are cooperating fully with the FCA in relation to the investigation, which is ongoing. No findings have been made by the FCA about whether any breaches have occurred. Further details regarding the investigation are confidential and it would not be appropriate to comment further at this time.
“We are fully committed to serving our clients’ investment needs and acting in their best interests, and are working with the FCA to ensure that the investigation is resolved quickly and appropriately.”
