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NAPF and IMA clash on regulation

? The debate about soft commissions and bundling arrangements rumbles on in the UK, with fund manager and pension fund bodies at loggerheads over whether the Financial Services Authority should regulate arrangements.

The Investment Management Association says it does not support the FSA's proposed regulation of soft commissions and bundling. The National Association of Pension Funds, however, welcomes regulation.

IMA's stance is unsurprising given that fund managers would be expected to absorb much of the extra costs for research and information services.

Fund managers receive soft commissions, such as Reuters and Bloomberg screens, by directing business to particular brokers. They also get away with passing the cost of research - bundled with transaction costs - through to clients. Chris Angell, fund secretary for the London Regional Transport pension fund, says: "I think the IMA is trying to protect an untenable position. There's a lot of money involved for their members."

NAPF feels that regulation would help build momentum as there has been little change since 1986 when UK brokerages were opened to foreign competition and commission rates were deregulated. David Gould, director of investment at NAPF, says: "Little has happened over the last 17 years so the time has come for a gentle shove."

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