Why have you decided
to tackle soft commissioning and fee bundling
now?
It's important for customers to be clear how their money is spent.
We believe that there are conflicts of interest under the current
system.
What
evidence have you found that the arrangement whereby fund managers
pay soft commissions and bundle together the fees they receive for
research and execution is detrimental to
investors?
There is very little high-quality information about the dynamics of
the UK marketplace, so before we launched any regulatory proposals
we wanted to make sure that we understood the nature and scope of
the conflicts and the underlying economics of the market. We asked
Oxera [Oxford Economic Research Associates] to undertake research
on our behalf, and we have published their findings with our
consultation paper. Oxera's research showed that over £2.3 billion
[$3.6 billion] was paid in commission by UK institutional fund
managers to UK brokers in 2000.
What we are asking is whether there is an incentive under existing
soft commission...
