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French investor association sets out pre-election wish-list

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Af2i, the French institutional investor association that represents more than €2.2trn in assets, has written to the French presidential election candidates with its policy wish-list, ranging from domestic fiscal matters to Brexit and France’s place in the European Union.

Released last week, ahead of the first round of presidential elections on 23 April, the open letter was split in two, covering issues at the national level, such as the financing of the real economy and infrastructure, and issues at the level of the European Union, such as accounting and prudential regulation. The association said the measures it proposed reflect the views of the majority of its members.

At the national level, Af2i praised the work being done by industry-led initiatives, such as the FROG working group, to boost the competitiveness of French asset management. It said that these should be perpetuated in order “to promote and accelerate the reforms that our economy and financial players need”.

It contrasted these types of initiatives with rules and regulation it said the financial industry wished were less burdensome and better co-ordinated or consulted on.

Af2i highlighted draft reforms of the rules for pension schemes for the “free” professions (such as dentists, architects, and mid-wives), saying the envisaged regulations were difficult to follow, would increase operational and compliance risks, and would impose unjustified and detrimental asset sales.

The regulation needed to be re-worked, but without haste and with full industry consultation, it said.

Another specific request from Af2i was for the creation of a common institutional investor code, which it said would allow disparate and often obsolete rules – and good practice – to be unified in a single legislative or regulatory text.

A spokesman for Af2i noted that there were more than 20 types of entities deemed to be institutional investors in France, each governed by their own set of rules, which can be different or relatively similar, albeit without being identical.

He told IPE the association thought it should be possible to agree on matters such as the notion of prudent management, the definition of eligible assets, good governance, risk control, and the use of derivatives and financial instruments such as futures. 

Brexit concerns and opportunities

The UK’s pending departure from the European Union featured in Af2i’s letter, with the association saying that the country’s institutional investors feared unintended consequences if Brexit negotiations were unsuccessful and the European political climate deteriorated.

The association estimated that more than €300bn of French institutional assets were managed by London-based financial institutions of various nationalities, and said that the loss of the European investment fund passport would lead to uncertainty that institutional investors could have done without.

Af2i’s Brexit proposals to the presidential candidates included promoting the development of French subsidiaries of international fund managers in Paris and encouraging French expats to return to the capital. In connection with this, the state should promote accelerated construction of offices and quality accommodation in or near to the business districts in Paris, it said.

In a section dedicated to France’s place in Europe, the association’s letter said the country had many attractive features with regard to finance, but that “its voice is timid, little heard, and misunderstood”.

Brexit and the ensuing negotiations, both external and internal, were “a dream opportunity” for the country’s financial actors to be more present and more influential, with more support from the public authorities, said Af2i.

The letter can be found in full here.

Read more about French pension reform ideas and plans in IPE’s forthcoming May magazine

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