Intensive focus on culture and conduct of investment firms

Focus on culture and conduct of investment firms

Regulatory priorities on culture and conduct issues within investment management firms of all kinds currently centre on acting fairly towards customers in general, and regarding incentives and remuneration in particular.


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Distributors’ commissions

The regulatory response to continuing questions about whether commissions paid to distributors by manufacturers or out of investment products create unacceptable conflicts of interest is a global crack-down, although the approach differs across jurisdictions. Some are banning or limiting payments between product providers and distributors, while others are requiring greater disclosure.  And in many jurisdictions, investment managers are being required to disclosure aggregate remuneration of senior management and key staff, although some countries have pulled back from such proposals.

Client relations

There also remains a strong focus on how firms govern their business operations and the way in which they conduct their relations with clients, suppliers, intermediaries and the companies in which they invest their clients’ portfolios. Firms’ anti-money laundering and know-your-customer procedures and protection of client assets are examples. Corporate governance and risk management remain priorities, and the widespread use of outsourcing in the investment industry has encouraged regulators to consider related governance issues.

New to the good conduct scene are environmental issues. New carbon disclosure regulations for investment firms are set to follow a legally-binding treaty on climate action agreed in November 2015.

Building investment bank culture to drive competitive advantage

Frontiers in Finance considers strategies for investment banking that emphasize culture and technology change.

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