The Investment Association’s decision to disband its regulatory affairs unit has cast serious doubt over the trade body’s ability to influence policy at the highest level.
The IA has scrapped its regulatory affairs unit in an attempt to cut costs after three of its biggest members announced their decision to quit the trade body.
IA head of the regulatory affairs unit Richard Metcalfe has left as a result.
The decision has been criticised in some quarters of the industry.
A senior source in the asset management industry warns “the real danger” of disbanding the regulatory unit is the risk of losing influence at industry level.
He says: “We’ve got an avalanche of European legislation coming down the pike and if we don’t have cohesive representation we may not get at least some concessions.
“We’ve got the asset management review from FCA next year, so quite apart from the regulatory unit being shut down, the real danger here is we start to lose that participation at an industry level.”
The source adds firms threatening to leave the IA risk “destroying” the trade body.
Financial Inclusion Centre director and FCA board member Mick McAteer says: “The IA must have had a good reason to do this. It might have been to reduce costs or because members are leaving, so it could well be for internal organisation purposes.
“It is surprising as there is no question that regulation is going to be a priority for asset managers next year.”
gbi2 managing director Graham Bentley says the move could leave the IA without a voice to influence regulatory change both in the UK and Europe.
He adds: “You have to ask yourself whether the IA is going to engage with the regulator on behalf of fund groups or not.”
The decision follows a period of turmoil for the IA. High profile members Schroders, M&G and St James’s Place are set to quit the trade body at the end of this year, while Daniel Godfrey left his role as chief executive after a member revolt.
IA interim chief executive Guy Sears says the trade body’s regulatory activities will now be overseen by its “core” teams.
He says: “We believe that enabling our core teams, which cover the full range of investment areas, to oversee their own regulatory engagements will help us to deliver the highest quality of advocacy for our member firms, key stakeholders and the industry’s end-clients.”
Editor’s note: A version of this article appeared in the 10 December 2015 print edition of Money Marketing, with the headline “Disbanding regulatory unit ‘risks destroying IA’”. Money Marketing would like to apologise for the inaccuracy of this headline, and has amended the headline online accordingly.