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Horlick says regulation stopping fund start-ups

Excessive regulation will prevent entrepreneurs from building fund management businesses from scratch, warns SG Asset Management joint managing director Nicola Horlick.

Fund managers such as Perpetual and Jupiter have proved in the past that it is possible to build top 10 managers from a standing start.

But Horlick believes the cost of regulation and compliance costs are preventing independent fund managers from setting up shop in the UK.

She says without the backing of big international financial backers such as SGAM&#39s parent company French bank Societe Generale, potential fund managers could not afford the cost of regulation.

Speaking at an FSA-sponsored conference for fund managers this week, Horlick said that, while an aggressive regulatory environment is a good thing to ensure the protection of investors, the costs associated with regulation are prohibitive to new players.

Eleven of SGAM&#39s 130 employees in full-time jobs deal with compliance and regulation.

In addition to the high compliance costs, Horlick is also calling on the FSA to relax some regulations.

She wants the limits on how much a unit trust can invest in any one stock to be scrapped. She also does not believe unit trusts should be forced to offer single-priced funds and wants different classes of unitholders to be allowed, as they are with Oeics.

Horlick says: “Someone who is looking to establish a presence in the UK could not afford to do so without the backing of a large financial institution. The situation in this country is at the point where it is on the side of being too costly.”

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