IMA welcomes OFT underwriting probe
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The Investment Management Association chairman Douglas Ferrans has welcomed the Office of Fair Trading’s probe into equity underwriting, saying it underscores investors’ own initial views.
Last week, OFT announced a market study of equity underwriting and services provided by investment banks, after receiving a number of complaints from companies in recent months.
Speaking earlier this week at the IMA’s annual dinner at the Mansion House, Ferrans welcomed OFT’s probe, saying it would complement the association’s recently announced investigation into the fees paid on rights issues commissioned by the Institutional Investor Council.
Ferrans urged the financial services industry to deal with conflicts of interest created by excessive intermediation which, he said, “delivers little or questionable benefit or value” to customers and has created a “risky form of capitalism”.
He also said insurance-owned fund managers had a duty to act responsibly and where necessary inform conflicted parent companies of their fiduciary duty to clients.
He said: “If they don’t like it, it is clear they should divest themselves of their investment management businesses and only then can the conflicts be conquered and the behaviours altered!”
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