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Govt reveals plans for asset management ‘Centres of Excellence’

The Government has unveiled plans to introduce Asset Management Centres of Excellence across the UK in its second investment management strategy paper, published today.

It was announced in the Autumn Budget that the Government would be publishing the Investment Management Strategy II following the launch of the first strategy in 2013 as part of its long-term drive to strengthen the UK’s status as an asset management hub.

The Asset Management Centres of Excellence will be set up at UK universities nationwide and funded by redistributing the current academic research spend, which the Government says is “spread thinly across many institutions and initiatives”.

“By consolidating the majority of existing research spend and concentrating it in a more focused way, the industry would be able to benefit from economies of scale and have a greater impact on skills,” the paper says.

“These centres will form the backbone of the UK’s world-leading asset management capabilities and professionalism where qualifications would be universally recognised as a global standard.”

Among the other initiatives outlined in the paper, the use of fintech is a key focus, including a push towards robo-advisers and eliminating back office fund administration functions through the development of a blockchain-enabled digital fund with the Investment Association.

“By reducing the number of intermediaries, a fund will make cost savings that could result in lower costs for the end investor,” the paper says.

The Investment Association is also working on the world’s first Asset Management Cyber Security Strategy to protect users of fintech.

Green finance is being prioritised by the Government, with the paper labelling it “an enormous commercial opportunity for the UK asset management sector”.

As such the Government has commissioned the British Standards Institute to develop the world’s first green finance management standards, to ensure that “the UK remains at the forefront of the sector”.

With Brexit on the horizon, the Government is working with the FCA on simplifying cross-jurisdiction investing, potentially through Mutual Recognition of Funds agreements.

“These arrangements could, in principle, allow UK funds to benefit from a streamlined recognition process when seeking to access overseas investors, and overseas funds would benefit from a similarly streamlined regulatory approach within the existing regulatory framework when seeking to access UK investors,” the paper says. “Through this, the Government intends to increase the global reach of UK funds and provide UK consumers with access to diverse product offerings.”

Other plans include working to attract overseas firms to set up business in the UK and promoting UK firms overseas and potentially consulting on making changes to the short-term business visitors’ rules in Spring 2018. The rules currently levy taxes on employees from a foreign branch of a UK-based firm when they make short visits to the UK.

Chris Cummings, chief executive officer of the Investment Association, welcomes the Govnerment’s proposals.

He says: “Together with the Asset Management Taskforce, this comprehensive strategy provides the opportunity for partnership between Government, industry and regulators to ensure the UK remains the leading European asset management centre.

“The forward-looking agenda brings a welcome focus on the critical success factors of tomorrow, including harnessing the fintech revolution, encouraging sustainable investment and ensuring a diverse and world-leading workforce. Domestic excellence will help to boost the industry’s export and trade contribution as the UK looks to a new place in the world. This strategy means our industry will continue to deliver the best possible outcomes for savers and for the UK economy in the years to come.”

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