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Positive aspects of the FSA break-up

Coming back to work after being away for 13 months on maternity leave, I naturally wondered what would have changed. The simple answer is everything and nothing.

I freely admit to paying little attention to what was happening in the financial services world as all my efforts were concentrated elsewhere. But I did find myself wond-ering what new issues were confronting the investment manage-ment industry.

When I came back, in many ways, it felt like I had never been away – the retail distribution review, the key investor information docu-ment, auto-enrol-ment, corporate governance, the alternative investment fund managers directive and the need for a predictable and consistent UK tax regime to name but a few. I am sure that much has changed in the interim but there still seems to be a long way to go on some of these. And, of course, from a PR perspective, IMA sectors and statistics still generate signif-icant press coverage and will no doubt continue to do so.

Another ongoing issue is the heavy regulatory agenda coming from Europe and the need for the UK Government to engage in the European legislative process. IMA chief executive Richard Saunders recently told the Treasury select committee that the UK should not assume that proposed European legislation would always be aligned with UK interests.

He also pointed out that the FSA should make sure it was fully involved in the estab-lishment and work-ings of the European Securities and Mark-ets Authority.

It may sound like everything has stayed the same. Not so. There was one big change – the breakup of the FSA. It feels like only yesterday that the FSA was formed and yet here we are again debating how our industry is to be regulated. Of course, the context is very different and there is a massive job to do in terms of restoring confidence and trust in what is a very important sector for the UK. To have simply tinkered at the edges of regulation would not have been enough.

The proposals this time round recognise what the investment management indus-try has been saying all through the credit crisis – that invest-ment management firms are quite dist-inct from the banks and did not play a part in causing the credit crisis. That the new proposed struc-ture gives our indus-try a different regul-ator to that of the banks is clear recog-nition of the differ-ence between us.

Under the Cons-umer Protection and Markets Authority, which will also be responsible for all conduct of business, including that of the banks, we face the prospect of finally getting consistent standards for comp-eting retail products. The standards currently applied to funds should be seen as a model for bringing other products up to their standard.

All in all, despite the many issues which continue to exercise us, some year in year out, the prospect of a new regulatory structure offers a refreshing change and could be a positive develop-ment for the invest-ment management industry.

Mona Patel is head of communications at the Investment Manage-ment Association


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