A Financial Conduct Authority (FCA) review found that UK fund managers spent £1.2 billion on payments to financial advisers in 2023, often in the form of hospitality, commission, or marketing support. The FCA warned that such payments could create conflicts of interest, leading advisers to recommend funds that benefit them rather than clients.
The review, published in March 2024, examined 15 major fund firms and found that many lacked adequate controls to ensure payments did not influence advice. The FCA said it would take action if firms failed to improve transparency and governance.
Industry groups argued that the payments are standard practice for legitimate services like training and research. However, consumer advocates said the scale of spending shows the need for stricter rules to protect investors.
The FCA plans to consult on new rules later in 2024, potentially capping or banning certain types of payments. The move follows similar crackdowns in the US and EU.
