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01 February 2016

IMA: The success of the EU regulatory framework is vital for the UK asset management industry

IMA outlined its support for the majority of existing EU financial services regulation and commended how it has mostly set high quality and appropriate standards for the way the sector operates.

Following the global financial crisis in 2008, the EU Commission and Parliament has put forward and implemented a number of wide ranging regulatory policies with the view to re-establishing financial stability and public confidence in the financial system.

Recognising the vast amount of legislation that has been adopted as well as the rules that are yet to be finalised, the EU Commission last year called upon financial institutions and industry bodies to provide evidence and analysis of where interactions between the different pieces of regulation may have caused unintended consequences, and where there is room for improvement.

To help ensure that the EU regulatory framework continues to operate to the benefit of the UK asset management industry and the millions of savers it serves across the world, the Investment Association has responded to the Commission with structured feedback as to where improvements could be made.

In terms of where the framework could be enhanced, the Association has called for the Commission to look at the rules and regulation that have adversely impacted:

The investment industry’s ability to provide the widest range of services and products to savers and investors

The main concern is that existing conflicts of interest and inducement rules are not driving a better consumer outcome in terms of investment product price and choice for EU consumers

The functioning of the financial markets, particularly in their core purpose to facilitate the allocation of savings to productive business at low cost

The main concern is that regulation of banks and markets impairs the efficient functioning of financial markets

The cost and benefits of running asset management businesses in the EU, such as prudential and remuneration requirements

Guy Sears, Interim Chief Executive of the Investment Association, said: “The success of the EU regulatory framework is critical to ensuring that the investment industry and the Capital Markets Union initiative are able to achieve their mutual goals of supporting greater investment, increased productivity, and growth and job creation across the EU and beyond. The single market, fund passporting rights, the UCITS regime and a relatively harmonised single rulebook have all undoubtedly brought significant benefits to the UK’s asset management industry. Equally, we agree with the Commission that it is the time to ask what areas of regulation are effective and fit for purpose, and where the removal or re-alignment of existing regulations is needed.”

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