Watchdog rap for asset managers

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UK asset managers are unable to demonstrate they are not putting their interests before those of customers or saddling them with unneeded costs, a survey of sector firms by regulators has suggested.

Worried by apparent complacency among firms about keeping to rules, the Financial Services Authority said it had demanded all chief executives make formal declarations and show that they can manage conflicts of interest.

The regulator said it has already taken enforcement action against a firm that bought a security for one client and used the proceeds to allow another customer to redeem another illiquid security issued by the same group.

It said its study of 15 firms in the sector showed managers failed to understand or communicate a sense of duty to keep to the rules to customers.

The report also said the FSA was considering further action in the most serious cases.