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FSA ready to look at target-related fee deals

Fund firms could be allowed to offer performance-related fees after the FSA admitted there is a greater case for them than ever before.

At the Investment Management conference in London this week, FSA head of collective investment schemes Kevin Tomlin said the regulator was looking at more flexible pricing, including performance-based fees.

Currently, investors can only access adjusted fees through offshore funds although some firms offer partial rebate of fees if a fund does not meet prescribed targets.

Any move would mark a change in policy for the FSA, which previously dropped the idea of performance-related remuneration over concerns about the different ways that funds are priced.

But it appears fund firms would not be under any immediate obligation to offer adjusted fees as the updated collective investment scheme sourcebook which the FSA is drafting will not come into force until 2007.

Tomlin said: “Should we introduce a more flexible reg-ime for pricing? There is a greater argument for introducing performance fees than ever before. We believe chan-ges to issues like this are important to the industry and investors.”

Henderson Global Investors head of UK retail Simon Ellis says: “We would have to welcome a move to performance-related fees. It seems investors and their advisers are happy with the concept and the alignment of interests. It is something that we have been lobbying for.”

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