Regulatory reform is still the biggest driver of evolution in the funds industry, but many still consider it a significant cost overhead with limited value, according to a survey by Northern Trust Depository Services.
Regulations were considered the biggest driver of change by 45 percent of respondents. However, 74 percent believed that their investors do not see the value of regulatory implementation, seeing only the costs. The other 26 percent thought their investors value the added protection, transparency and clarity that arises from increased regulation.
The results echo those of a 2013 Northern Trust survey in which 66 percent of fund managers said they view the Alternative Investment Fund Managers Directive primarily as a compliance exercise, despite the pan-European passporting initiative, which is designed to make distribution easier.
Toby Glaysher, head of global fund services for Europe, the Middle East and Africa at Northern Trust, said: “The pace of European regulatory change is set to continue and, now more than ever, there is a greater need for aligned solutions to meet both the challenges and opportunities brought by regulation.”
Darren Banks, head of Northern Trust Depositary Services for the UK, added: “It comes as no surprise that the complexity of regulation can sometimes cause the overall benefits to become unclear.”
The survey also addressed the UK Authorised Contractual Scheme (ACS) – the UK’s first authorised tax-transparent fund, designed to help asset managers with cost pressures, distribution, and regulatory change.
While 58 percent saw cost efficiency as the biggest benefit of ACS, 56 percent also believed that new fund launches would trend towards onshore UK funds, meaning that the UK would remain competitive.
Banks said: “The UK is Europe’s leading market for fund management and it’s important to ensure the market remains competitive and our clients are able to take advantage of new opportunities available to them.”
The survey included more than 70 fund managers, prospective clients and consultants attending a seminar in London in June.
