FCA to allow bundling of investment research fees

As announced last year, the FCA is now consulting on introducing more options to pay for investment research, including the ‘bundling’ of payments for third-party research and trade execution.

This FCA consultation would implement one of the recommendations from Rachel Kent’s 2023 review, reversing the restrictions on bundling introduced under MiFID II in 2018. The FCA is proposing that asset managers are given greater freedom in how they pay for research, which should suit firms of varying business models and sizes and help promote competition.

These changes could help smaller active fund managers, given the current options available to UK asset managers can be operationally complex and may, in some instances, favour larger asset managers. The proposals could also potentially boost small company research, and make it easier for UK asset managers to buy investment research from outside the UK. 

The consultation closes on 5th June, and the FCA then aims to produce final rules in H1 2024, but the timetable will depend on the amount, strength and breadth of consultation responses. 

Published 11 April, 2024