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IPE special report May 2018

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IPE 360: Asset managers should 'fight back' against regulator

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Asset managers should “fight back” against regulatory creep, according to a leading pensions lawyer and trustee.

“Most asset managers ignore the regulator or just comply. I don’t want you to do that. I want you to fight.”

Robin Ellison, Carillion Pension Trustees

Speaking at the IPE 360 conference in London last week, Robin Ellison, chair of trustees at Carillon Pension Trustees in the UK, raised concerns about the Financial Conduct Authority’s (FCA) asset management review. The final report is due to be published tomorrow.

Ellison said: “What the regulatory framework has been trying to do for the past 20 years is to turn asset managers into a profession in which you have a duty to the client higher than the duty to yourself.

“At the same time, most people in asset management are much better behaved now. The value of trust is being built up, which it wasn’t before, so the need to professionalise seems to be less important than it was before.”

Transparency, fee levels, and competition – the three main elements of the asset management review – were all improving “because of the market, not despite the market”, Ellison argued.

Increased regulatory requirements and forcing more intermediaries to take fiduciary responsibilities was causing “a little bit of havoc and a lot of cost for asset managers”, he said – with the costs eventually being borne by members and individual investors.

He also took aim at the FCA’s criticism of asset management companies’ profit levels. In its interim report into the industry, published in November, the regulator calculated that average profits were roughly 35% at listed asset managers.

Ellison – who is also head of strategic development in pensions at law firm Pinsent Masons – questioned whether this was an area that warranted input from the regulator.

“I’m not sure it’s anything to do with the regulator,” he said. “What is the regulator doing talking about how profitable [asset managers] are? It should be glorying in the fact that it’s a profitable industry.”

Ellison claimed asset managers were “asleep on watch” when it came to regulation.

“I want you fighting back on my behalf to argue with the regulator,” he said. “Most asset managers ignore the regulator or just comply. I don’t want you to do that. I want you to fight.”

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