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Jenkins rallies investment industry in 'titanic tussle' over regulation

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  • Jenkins rallies investment industry in 'titanic tussle' over regulation

UK - The investment management industry must join the "titanic tussle" over financial regulatory reform as it is the only industry with the "credibility and clout" to shape the debate, according to the former chief executive and chairman of F&C Asset Management.

Robert Jenkins, now a member of the Bank of England's financial policy committee, said that while academics had weighed into the debate surrounding financial regulation in the aftermath of the financial crisis with "truth and light", they did not have the political influence to fight on behalf of a "formidably funded" banking lobby.

Jenkins, who has held a number of positions across banking and asset management in a career spanning nearly four decades, said it was therefore the investment management community's responsibility to speak its voice.

"Alas, no stakeholder group has been more silent," he said at the CFA UK's annual chairman dinner earlier this week.

The former chief operating officer of Credit Suisse's UK asset management arm added that it might strike some as "rich" to ask the investment management industry to support regulators that had "harangued and harassed" them, but the only way to correct what he viewed as misplaced blame was to "speak up and stand out".

He acknowledged that some individual agents in the industry - including the CFA and Investment Management Association - had taken a stand on select issues, while others have rallied around audit reform, but he said such instances were still all too rare.

"More recently, a US hedge fund took a public stand in favour of a more highly capitalised banking sector," he said.

"This is all encouraging, but the fact the latter made front-page news speaks to how unusual it is to hear from the investment community on issues of banking reform."

Jenkins added that, while the industry could not abolish greed or outlaw stupidity, it must limit leverage.

"The good news is that the new rules will limit leverage in banks," he said. "The bad news is they will do so at 33 times. Thirty-three times leveraged! It's a hedge fund manager's dream - or nightmare," he said.

Jenkins estimated that the average hedge fund would be leveraged significantly less, around three times, but that they were not supported by a "taxpayer backstop".

He argued that, with the old financial structure crumbling and a "brittle" new system on the rise, investment managers must act, if only because their clients will have to function within the system's restrictions.

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