In 20171 we conjectured that the new political context within Europe and elsewhere was likely to have a significant influence on future regulatory policy and rule-making. Our insight has been proven correct. After the financial crisis, regulators around the globe
The US administration believes the raft of post-crisis regulation has encumbered its asset management industry. There is a desire to deregulate. Within Europe, each piece of post-crisis regulation has a review clause, but each of these reviews has a different due-by date. There are some calls to review rules in the round and to consider their
The emerging difference in policy approach is especially clear in the ongoing debate about systemic risks inherent in asset management activities and investment funds. Outside the US, the application of a banking policy
As regards supervisory activities, though, there is a common global theme - increased scrutiny of the asset management sector. Regulators are evolving their supervisory approach, seeking increased resources and harnessing technology. They continue to focus on governance, culture
The protection of client data has emerged as a major priority, with big questions for asset managers about what data they hold and whether they may need to restrict
Simple and meaningful cost disclosures for funds remain firmly on the regulatory agenda but are elusive. And an increasing number of regulators are also scrutinizing the level of costs and charges. Are investors being put front and
The word competitiveness is beginning to re-enter regulatory language. The European Commission has made it a priority for 2018 to remove barriers to creating a more competitive pan-EU investment landscape, including for personal pensions. However, there are questions about whether its proposals will result in more red tape, not less.
“Brexit” will impact
It seems that asset managers will need to navigate a complex distribution landscape for some years to come.
Regulation is also entering new areas of the asset management business. It is evolving to facilitate the development of “
Sustainable investing was until recently considered a matter only for asset managers and investor preferences. This subject, too, has now entered the regulatory mainstream. Initiatives relating to environmental, social and governance (ESG) factors and socially-responsible investing (SRI) have received regulatory support in several countries. See the previous edition of Regulatory Insights for more detail on the European Commission's proposals.
As institutional investors increasingly ask more questions about ESG and SRI - in part prompted by their own beneficiaries' demands, in part by regulatory suasion - the long-standing debate about whether consideration of ESG factors or SRI fits with fiduciary responsibility is evolving. Also, some regulators are beginning to ask questions about diversity in the
While navigating an increasingly complex regulatory landscape, asset managers will need to keep their eye on the reviews of post-crisis regulation and further regulatory proposals. It seems that the industry will need to operate within and manage uncertainty, for some time to come.
1Succeeding in an uncertain regulatory landscape
2Markets In Financial Instruments Directive, revised