On 10 July 2023, as part of the Mansion House Reforms (see FC Feature 11 July 2023), HM Treasury published the outcome of the Investment Research Review (Report: UK Investment Research). The review was announced by Chancellor Jeremy Hunt in December 2022 as part of the government's package of Edinburgh Reforms (see FC Feature 9 December 2022) and its terms of reference were published in March 2023 (see FC Feature 9 March 2023).
The review was set up to examine the link between the levels of investment research and the attractiveness of the UK as a destination for companies considering a listing. In the final report, Rachel Kent (who had been appointed to lead the review) makes a series of recommendations to the government, the FCA and industry. Her key recommendations include the following:
- establish a Research Platform that will provide a central facility for the promotion, sourcing and dissemination of research, in particular in relation to smaller companies;
- amend regulations governing how investment research is paid for, to allow clients and their managers greater choice;
- enable greater access to investment research for retail investors;
- harness the knowledge and expertise of academic institutions to assist in the provision of research on innovative companies and sectors;
- support issuer-sponsored research by implementing a code of conduct;
- review the current UK regulatory regime regarding investment research to make it more streamlined and efficient and consider introducing a bespoke regime for the provision of investment research; and
- review the rules regarding investment research in the context of IPOs.
The Chancellor has welcomed the report and accepted all recommendations made to government. The FCA has similarly published a statement welcoming the Report (FCA Press Release). In its statement, the FCA commits to engaging with market participants straight away, with a view to consulting on an accelerated timetable on potential regulatory changes that could introduce more options on how to pay for investment research. Subject to the outcome of the consultation, the FCA aims to make relevant rules in H1 2024.
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