Fund managers rated by Assirt Research will have to pay all of their fees upfront and won’t be able to view the ratings ahead of their release to the market.
The new policy, which was introduced by the Sydney-based research house yesterday, is in line with forthcoming conflicts of interest legislation which come into effect on 1 January 2005.
Previously, draft copies of ratings reports, which included the ratings themselves, were sent to fund managers so they could review factual content, raising concern that fund managers could put pressure on the integrity of the ratings by threatening to withhold paying the final fee.
But Assirt was quick to say that these practices had no influence on their ratings, claiming the changes were made to ensure public perception reflects the highly unbiased nature of its research output.
“I’m not sure why [the old procedures] were there but we’ve certainly been reviewing a lot of things since I’ve been here and that was one policy we thought needed to be reviewed so I’ve decided to change it,” said Assirt head Simon Ibbotson, who came to the group only 18 months ago.
“Perhaps we were just being kind previously allowing them to spread the fee along the duration – not that managers would threaten not to pay us. We’ve introduced the new practices just to avoid that potential, to make it clear and above board and make sure everyone knows that we’re not open to criticism.”
The changes come less than a month before the Australian Securities and Investment Commission’s PS181 and CLERP 9 conflict of interest regulations come into force.
ASSIRT announced it would be developing further enhancements that go beyond ASIC’s recommendations in the near future but could not yet confirm what they would be.
