Nickerson: Conflicting rule changes are causing uncertainty for advisers (Fund Web)


As asset managers contend with the continuing onslaught of regulatory requirements one of the great uncertainties with which they must deal is conflict. Not with the regulators themselves but with contradictory rule changes between jurisdictions, which adds to the cost and compliance burden of dealing with new requirements. Such conflicts also create great uncertainty for advisers.

UK asset managers obviously must deal with FSA regulations but are also impacted by European directives as well as US rules, all of which are creating regulations based on local concerns. This results in disjointed and at times, contradictory, regulations.

Before stepping down at the end of last year, the IMA’s former chief executive Richard Saunders noted: “We are seeing a rise in more aggressive extraterritorial regulation which is adding cost and complexity to the industry and breeding protectionism in different jurisdictions. The litmus test for new regulation should be whether it brings real benefits to end investors. Too often this seems not to be applied.”

Philip Warland, head of public policy at Fidelity, agrees regulations from different jurisdictions based on their own issues creates problems for global asset managers and for investors, for whom the regulations are supposed to help. “The dividing line between investor protection and protectionism is a thin one,” he says.

Even within the same territory there can be contradictory actions. For instance while the UK’s HMRC seems keen on venture capital trusts, allowing substantial tax incentives to encourage investors, the FSA’s recent Ucis consultation seems to challenge such sentiment. If included in Ucis, VCTs could be dealt a severe blow and it could lead to the collapse of many products.

David Kaye, the chief executive officer of Puma Investments, says: “VCTs do a small but important job in supporting SMEs (small and medium sized enterprises). This is particularly important in the current economic environment. The UK government wants us to continue in this capacity as we are performing a vital role, funding the creation of jobs.”

See full artcile on the Fundweb website.