UK sets up asset management taskforce in Brexit-fuelled action plan
The UK government is establishing an asset management taskforce of industry CEOs to help meet challenges posed by Brexit.
Addressing a conference in London last week, City minister Stephen Barclay said establishing such a taskforce was a response to a request from the industry.
He said the government was intent on preserving the industry’s right to delegate portfolio management despite the UK’s imminent exit from the European Union.
The taskforce would bring together chief executives from within the UK asset management industry and senior representatives from investor groups and the Financial Conduct Authority (FCA), Barclay said.
“It will be a forum to discuss how government, industry and the regulator can work collaboratively to stay competitive and deliver for investors,” he said. “After discussing the issues facing UK asset managers with CEOs across the industry, there is a clear need for a discussion forum like this.”
The taskforce is part of the government’s bid to ensure the UK remains “the best place in the world for asset management,” with Barclay in particular highlighting business opportunities in non-European countries such as Brazil, China and India.
”These are opportunities that we’re determined to realise, whether that’s attracting Brazilian pension funds to the UK or enabling UK firms to do more business in Brazil,” he said.
The UK’s trade body for the asset management industry welcomed the creation of the taskforce.
The UK’s upcoming departure from the European Union has raised many questions about the future of the country’s asset management industry, with much of this turning on delegation rules that allow asset managers registered in one country to run money in another.
Barclay said the government would seek “to strongly support the global delegation model for portfolio management, in partnership with other countries that share our views on this issue”.
He told delegates that he saw the model as an integral component of the asset management industry for the UK, but also for the US, Asia and the rest of Europe.
It allowed UK asset managers “to sit at the heart of global investment allocation”, and also benefitted Europe.
“A restricted delegation model would cause fragmentation and prompt funds located in Europe [to] leave the continent for other financial centres such as New York or Hong Kong,” he said.
Brexit had only injected “a renewed urgency” for the government’s pre-existing intention to turn its attention to the asset management sector, according to Barclay.
He would be happy to hear the industry’s ideas for tax reform, but said he would be looking at four areas beyond tax: the regulatory framework, fintech, opportunities for innovation, and skills.
Barclays’ speech echoed comments made earlier at the conference by Megan Butler, executive director for supervision for wholesale and specialist investment at the FCA.
In a speech, Butler delivered a thinly veiled criticism of positioning by EU regulators, saying that there was “no real justification for unnecessarily complicating rules around delegation and outsourcing”.
“Both are integral elements of efficient market business models,” she said. “Both work well now. And there is no reason to suggest both won’t work well in the future.”
Butler also suggested changes to delegation provision could potentially have an adverse impact on European and global markets.
Earlier this year the European Securities and Markets Authority warned against UK-based fund managers creating “letterbox” entities in the EU after Brexit and said that delegation and outsourcing should only be allowed under strict conditions.