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FSA to fine fund managers for violating rules

As per the rules, investors’ money should only be used for trade execution and research.

The Financial Services Authority (FSA) is planning to impose fine on asset managers using investors’ money to pay for access to chief executive officers (CEOs) after finding that some are spending tens of millions of pounds annually on corporate access.

FSA comments came after the Financial Times (FT) reported that asset managers are paying brokers up to $20,000 an hour to meet CEOs of their corporate clients.

In its analysis, the FSA found 15 asset managers utilising client commissions that were hard to justify. Most of them covered payments for corporate access, alongside smaller sums for access to market data.

Raising an idea to impose fines for fund managers for violation of rules, Ed Harley, head of asset management supervision at the FSA, said: “There is an awful lot of clients’ money being used here and it has to be used properly.”

“When we challenged firms as to how they can justify [payments for corporate access] they couldn’t give us a coherent answer that met those criteria,” Harley added.

The European asset managers paid 29 per cent of their dealing commissions for client access in 2012 despite a 2006 ruling by the FSA, according to the Thomson Reuters Extel Survey.

Daniel Godfrey, chief executive of the Investment Management Association, has questioned why his members have to pay rents to brokers to meet company executives, but said payments out of client money should not be stigmatised per se.

“Payments for access to companies may be something you have to hold your nose to do, but maybe it is in the interests of your clients to do it,” Godfrey added.

Meanwhile, the FSA has asked 195 largest asset managers in the UK to confirm that they are managing conflicts of interest between themselves and their customers.

Last year the British regulator fined Edinburgh-based fund manager Martin Currie £3.5m for not managing a conflict of interest between clients.

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The proposed cuts to junior doctors’ pay will make medicine a profession for the privileged

Jeremy Hunt is an intelligent man with a first-class education. This makes his ill-fated proposed contract appear even more callous rather than ill-judged.

The emblem of the British Medical Association (BMA), the trade union for doctors in the UK, symbolises Asclepius, who was believed to be the founder of western medicine. Asclepius was killed by Zeus with a thunderbolt for resurrecting the dead. In the same way, the proposed government-led contracts to be imposed on doctors from August 2016 may well be the thunderbolt that kills British medical recruitment for a generation and that kills any chance of resurrecting an over-burdened National Health Service.

The BMA voted to ballot their junior doctor members for industrial action for the first time in 40 years against these contracts. What this government has achieved is no small feat. They have managed, in the last few weeks, to instil within a normally passive profession a kindled spirit of self-awareness and political mobilisation.

Jeremy Hunt is an intelligent man with a first-class education. This makes his ill-fated proposed contract appear even more callous rather than ill-judged. Attacking the medical profession has come to define his tenure as health secretary, including the misinformed reprisals on hospital consultants which were met not only with ridicule but initiated a breakdown in respect between government and the medical profession that may take years to reconcile. The government did not learn from this mistake and resighted their guns on the medical profession’s junior members.

“Junior doctor” can be a misleading term, as we are a spectrum of qualified doctors training to become hospital consultants or General Practioners. To become a consultant cardiac surgeon or consultant gastroenterologist does not happen overnight after graduating from medical school: such postgraduate training can take anywhere between 10 to 15 years. This spectrum of highly skilled professionals, therefore, forms the backbone of the medical service within the hospital and is at the forefront of delivering patient care from admission to discharge.

Central to the opposition to the current proposed contract outlined in the Review Body on Doctors' and Dentists' Remuneration is the removal of safeguards to prevent trusts physically overworking and financially exploiting these junior doctors. We believe that this is detrimental not only to our human rights in a civilised society but also detrimental to the care we provide to our patients in the short term and long-term.

David Cameron recently stated that “I think the right thing to do is to be paid the rate for the job”. This is an astute observation. While contract proponents are adamant that the new contract is “pay neutral”, it is anything but as they have tactfully redefined “sociable hours” as between 7am and 10pm Mondays to Saturdays resulting in hardest working speciality doctors seeing their already falling inflation-adjusted pay slashed by up to further 30 per cent while facing potentially unprotected longer working hours.

We acknowledge that we did not enter medicine for the pay perks. If we wanted to do that, we would have become bankers or MPs. Medicine is a vocation and we are prepared to sacrifice many aspects of our lives to provide the duty of care to our patients that they deserve. The joy we experience from saving a person’s life or improving the quality of their life and the sadness, frustration, and anger we feel when a patient dies is what drives us on, more than any pay cheque could.

However, overworked and unprotected doctors are, in the short-term, unsafe to patients. This is why the presidents of eleven of the Royal Colleges responsible for medical training and safeguarding standards of practice in patient care have publically stated their opposition to the contracts. It is, therefore, a mystery as to who exactly from the senior medical profession was directly involved the formation of the current proposals, raising serious questions with regard to its legitimacy. More damaging for the government’s defence are the latest revelations by a former Tory minister and doctor involved in the first negotiations between the BMA and government, Dan Poulter, implying that the original proposals with regard to safeguarding against unsafe hours were rejected by Mr Hunt.  

The long-term effects of the contract are equally disheartening. Already, hundreds of doctors have applied to the General Medical Council to work abroad where the market price for a highly trained medical profession is still dictated by reason. With medical school debts as great as £70,000, this new contract makes it difficult for intelligent youngsters from low-income backgrounds to pay back such debts on the modest starting salary (£11-12 per hour) and proposed cuts. Is medicine therefore reserved only for students from privileged backgrounds rather than the brightest? Furthermore, the contracts discourage women from taking time out to start a family. Female doctors form the majority of undergraduate medical students – we should be encouraging talented women to achieve their full potential to improve healthcare, not making them choose unfairly between work and family at such an early and critical stage of their career.

Postgraduate recruitment will therefore become an embarrassing problem, with many trusts already spending millions on hiring locum doctors. Most hospitals are not ready for Hunt’s radical reforms as the infrastructure to supply seven-day working weeks is simply not available. With a long-term recruitment problem, this would also be a toxic asset for potential private investors, should the health secretary venture down that path.

Jeremy Hunt has an opportunity to re-enter negotiations with the BMA to achieve a common goal of improving the efficiency and recruitment to the health service while protecting patient care. Although the decision for industrial action should never be taken lightly, as future leaders of clinical care in the UK, we will do everything in our power to defend against such thunderbolt attacks, by men playing god, the integrity and dignity of our profession and on the quality of care it delivers to our patients.