FSA Considers Fines for Asset Managers on Conflicts of Interest
The U.K.’s Financial Services Authority is considering fines for some asset managers for failing to limit conflicts of interest.
The regulator said it observed poor practices including the favoring of certain customers over others, failing to report trading errors and inconsistent policies regarding the personal trading accounts of fund managers. The policies at firms for accepting gifts “might have caused concern about the objectivity” of decisions made for clients, the FSA also said.
Employees of some firms, which the FSA didn’t name, “often lacked awareness of situations where short-term business goals conflicted with the long-term interests” of customers, the regulator said in a letter to chief executive officers of asset management firms published on its website today.
The FSA carried out a review of conflicts of interest at asset management firms between June 2011 and February this year and will select some firms for follow up visits. Rules require the boards of asset management firms to set up and regularly review policies to prevent unfair practices.
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