Investment managers should only use client dealing commission to pay for substantive research or costs related to executing trades, the Financial Conduct Authority said today.

The regulator has published a policy statement on forthcoming changes to dealing commission rules.
It reinforces the current rules and provides greater clarity on what investment managers can pay for using client dealing commission – worth approximately £3 billion per year.
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Firms that already meet the rules will not need to make significant changes to the way they operate.
FCA chief executive, Martin Wheatley, said: "Investors should be confident that dealing commission is only used to buy execution or research services that deliver real value.
"These changes offer firms a real opportunity to show they put their clients first and strengthen the industry's reputation for transparency."
The FCA stressed the sector was vital to the UK's economy, investing over £5 trillion on behalf of clients across the world, and said it expected firms to ensure:

· They are acting as good agents and taking proper account of investors' interests
· They spend their clients' money as though it was their own, seeking to manage costs with as much tenacity as they pursue returns
· Clients are given easily understood information on the risks and costs of the service, and investment decisions reflect their stated objectives.
The changes on dealing commission come into force on 2 June after industry consultation.
They will prevent investment managers using dealing commission to pay for access to senior staff at firms they invest in.
The changes also clarify which costs investment managers can pass on to their clients through dealing commission, including specific guidance on mixed use assessments, where substantive research is bundled together with services that firms cannot pay for using dealing commission.