Report launches: Asset Management: the UK as a global centre”

Date: 09 Nov 2009


IMA Chairman Robert Jenkins today spoke at the launch of the Asset Management Working Group Report, “Asset Management: the UK as a global centre”.

The Group was convened by the Chancellor of the Exchequer to look at what needs to be done to ensure that the UK remains a global centre for Asset Management. Co chaired by the Chancellor of the Exchequer, Alistair Darling and Robert Jenkins, Chairman of the Investment Management Association, the Group represented practitioners from across the asset management industry.

Launching the Report of the Chancellor’s Asset Management Working Group, Co-Chair Robert Jenkins noted:

“Financial services are a critical component of the UK economy and asset management is a fundamental pillar of financial services.”

Jenkins observed that Government had, in the past, been overly influenced by the sell side – to the detriment of both the public and ironically the banks themselves. More recently, the buy sides’ role was better appreciated and the industry now had a seat at the policymaking table:

“The Report is timely. Recent market turmoil has sent lawmakers and regulators back to the drawing board. It is vital that the policy debate take account of the role and potential of the money management industry. For as we recently witnessed, when liquidity and capital shortages surface, the system depends as much on those who have the money as it does on those who need it.””Markets should be primarily for issuers and investors – not their intermediaries. Regulators should therefore give more attention to the interests of investors and capital raisers when drafting regulations.”

The Asset Management Working Group, which drew together representatives from companies across the industry as well as from the FSA, the IMA and the Treasury, sought to identify what the industry viewed as challenges to the global competitiveness and vibrancy of the UK’s asset management industry over the next decade and to make recommendations to help improve its global and European standing. Recommendations focused on all levels of engagement for the industry, including consumers, regulators, legislators, intermediaries and capital markets.

Highlights of the report include recommendations regarding how the tax regime in the UK could be improved to help the UK reposition itself as a leading fund domicile jurisdiction, five guiding principles for fund distribution to be adopted by all distribution channels across all European jurisdictions, and the application of simplicity and stability to pensions and ISA rules, and taxation to regain consumer confidence in these savings vehicles in the UK and to stimulate individuals to provide better personal provision for their long-term financial future.

Robert Jenkins called on his own industry to better communicate to its retail clients what asset managers could and could not deliver: “Consciously or unconsciously we have allowed some clients to expect results which exceed what we can dependably deliver. Be it through our advertising or investor education we must ensure realistic expectations of risk and return. If we fail to do this, we will not fail to disappoint. If we disappoint too often, we will fail.”

Jenkins acknowledged that the industry’s retail client proposition was muddled by confusion and conflict within the distribution system for financial products, and urged greater transparency at point of sale:

“The cost of advice must be better distinguished from the cost of the product. Who is paid by whom and how much must become even more transparent. Such principles must be adopted throughout the EU if the Community’s investors are to benefit and the UK industry to enjoy a level playing field.”
Jenkins called for a tax effective on-shore regime for the alternatives industry and a public debate about the merits of a tax-advantaged fund regime:

“Make the UK the domicile of choice for collective schemes. Past tax policies allowed Luxembourg and Dublin to capture business, jobs and tax revenue which would have stayed here. Bring Ireland and Luxembourg to the UK and do not allow the UK’s alternatives industry to move to an Ireland or Luxembourg. Why would we not?”

Jenkins warned against political interference in the content of accounts where integrity and transparency are of paramount importance.

“Financial reporting is primarily for capital providers; the asset management industry and its clients require transparency and accuracy of company accounts. Confidence in those accounts is a function of the integrity of the process by which they are constructed. The more that accounting rules are seen to be free of external pressures the greater will be that confidence.”

To see a full version of Robert Jenkins’ speech, please click on the following link.

The Report has been published by the Treasury and can be found on their web site.

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