2017年-FCA英国金融行为监管局_use_of_dealing_commission_multi_firm_feedback_10页_345kb

Regulator Assessment Summary: Use of Dealing Commission - Multi-Firm Feedback

Overview

This document outlines the FCA's assessment of the use of dealing commission by investment management firms in the UK, published on 3 March 2017. The FCA emphasizes the need for firms to exercise the same level of care and oversight when using customer funds for commission-related expenses as they would when using their own money. The assessment is based on previous thematic work, including reports from 2008, 2012, and 2014, and is part of the FCA's ongoing efforts to ensure compliance with regulatory standards.

Core Content

The FCA's assessment focuses on the following key areas:

• Use of Dealing Commission: Firms are required to use dealing commission only for eligible goods and services, such as substantive research and execution services.
• Compliance with Rules: The FCA found that many firms failed to comply with the evidential criteria for what constitutes substantive research, and that commission expenditure was often not properly monitored.
• Control and Oversight: There was a lack of effective internal controls and governance structures to ensure that firms were spending customer funds responsibly.
• Budgeting and Valuation: Many firms used historical trading volumes to determine research budgets, which was deemed inefficient. Some had implemented better practices, such as setting research budgets independently of trading volumes and using peer review to assess value for money.
• Corporate Access and Market Data: These services were found to be non-permissible under the rules and were sometimes used improperly, potentially creating conflicts of interest.

Main Points and Findings

1. Regulatory Context

• Applicable Rules: COBS 11.6.8G and COBS 11.6.4E and 11.6.5E.
• Implementation Date: The relevant rules have been in force since January 2006, with more stringent rules clarified in June 2014.
• Scope: Applies to all investment management firms in the UK that debit dealing commission from their clients.

2. Compliance and Oversight Issues

• Poor Practices: Some firms used dealing commission to pay for non-permissible services like corporate access and market data.
• Lack of Separation: Many firms did not clearly separate research and execution services, leading to potential overpayment.
• Insufficient Record-Keeping: Firms often lacked detailed records to justify research payments, making it hard to demonstrate compliance with evidential standards.

3. Positive Developments

• Improved Budgeting: 79% of firms in 2015 used research budgets, compared to 34% in 2012.
• CSA Implementation: Commission Sharing Agreements (CSAs) were found to help firms better manage research and execution costs.
• Cost Reduction: Firms that implemented rigorous budgeting and valuation processes saw a reduction in research spending (e.g., 10-15% in 2013, expected to fall to 60% of 2012 levels).

4. Risk Management Concerns

• Conflict of Interest: Firms that received corporate access meetings from brokers without charging for them risked subsidizing these services through dealing commissions.
• Peer Review and Internal Controls: Some firms had introduced peer review mechanisms and internal controls to ensure that research was valued appropriately and in the best interests of clients.

Cost and Benefit Analysis

Familiarisation and Gap Analysis Cost

• Estimated Cost: £48,000 for all 1,000 affected firms.
• Assumption: Based on a rate of £48/hour for compliance staff.
• Note: This cost is for reading, understanding, and disseminating the information. Firms already compliant with the rules would not incur this cost.

Ongoing Costs

• No Ongoing Costs: The FCA states that the publication does not introduce new obligations, so there are no ongoing compliance costs.

Benefits

• Cost Efficiency: Improved budgeting and valuation practices can lead to lower research spending.
• Better Returns for Investors: More efficient use of dealing commission can result in better investment performance.
• Enhanced Compliance: Clear documentation and internal controls can help firms meet regulatory requirements and avoid penalties.

Key Regulatory References

BIT Score and Cost Estimates

Conclusion

The FCA's assessment highlights the need for investment management firms to improve their governance and oversight of dealing commission usage. While some firms have made progress in implementing better practices, the majority still lack the necessary controls and transparency. The publication serves as a reminder that firms must treat customer funds with the same care as their own and ensure that commission expenditures are justified and documented. The estimated familiarisation cost is £48,000, with no ongoing costs, and the overall impact is expected to lead to more efficient use of dealing commission and better returns for investors.