Former Investment Association chief executive Daniel Godfrey believes a vote for the UK to leave the European Union would not be a “recipe for disaster” for the fund management industry.
Speaking to Money Marketing sister-title Fund Strategy, Godfrey says: “We don’t know what the terms of Brexit will be, but for investment management it is probably not a disaster. You can set up Dublin subsidiaries as well as in Luxembourg, and you can have your range of Ucits funds that you can distribute through Europe.”
According to recent analysis by BlackRock on the impact of a potential Brexit, UK-based Ucits funds might have to move their jurisdiction to a country within the European Economic Area, which would mean outside the UK if the decision is made for full-blown separation.
The firm says this would likely generate a taxable event for investors.
Godfrey says: “One real danger will be if UK-based portfolio managers were not allowed to act as investment advisers to what will effectively be the Luxembourg subsidiary.
“But providing there is a parallel to advice on the portfolio from London to a fund that sits in Luxembourg then the changes will be relatively minor.”
Godfrey argues in the event of Brexit the UK will maintain a high degree of regulation in financial services.
He says: “The UK in most areas has been more inclined to make regulations rather than having to lose them. However, it is not the Britain relationship with the EU that really needs reform, it is the EU that needs reform for the benefit of every citizen.
“My view on Brexit is shaped on a much higher level – on human issues. The bigger the EU is the more peaceful Europe will be and safer. Britain has a responsibility to be part of a big group like the EU to help keep other people safer and that is more important than economic issues.”
At a recent Treasury committee meeting, the IA, Wealth Manangement Association and Alternative Investment Management Association failed to provide evidence on the impact of a Brexit for businesses, as well as their contingency plans in the event of an exit from the EU.
Godfrey says: “We don’t know what Brexit will look like if it happens so there is not a lot we can do. [The trade bodies were] wrong to be tested as we don’t know at this stage what Brexit will look like.
“I would have not apologised to anyone because I don’t have facts and figures at my fingertips because no one knows what the future is.”