The U.K.’s Financial Services Authority has unveiled final rules to address conflicts of interest in the production of investment research for clients.

Financial firms will now have to develop and publish policies to ensure that their research analysts do not compromise their objectivity. Firms will be required to publish and implement their policies by July 1. Each firm’s policy will have to make clear which of the material it produces it considers to be objective research. Firms will need to have measures that ensure their analysts’ impartiality, and these measures will need to be clearly set out in the policy statement. Without such policies, firms will not be allowed to claim or imply that their research was objective.

The FSA says that these measures will focus firms’ attention on the real conflicts and how they are perceived. It says that firms are already responding to the growing international focus on conflicts management generally, and new rules will bring in provisions that will oblige them to manage conflicts across the whole of their business.

The International Organization of Securities Commission (IOSCO) published its set of principles in September 2003. The FSA says its principles are consistent with the core standards of the IOSCO principles as well as the standards applicable in the U.S..

“Senior managers are responsible for managing conflicts of interest within their firms. These proposals clarify how we expect firms issuing investment research to conduct themselves,” said Christina Sinclair, head of the FSA’s Business Standards Department. “Our objective is to improve confidence in the integrity of financial markets. Our requirements recognize that conflicts can affect investment research on products and markets beyond equity securities and include fixed income. But they are flexible framework requirements, which can be implemented across a broad range of firms with different business models, in a variety of markets, to ensure that analysts’ objectivity is not compromised. This framework, with its principles-based approach will stand the test of time.”