Global Trustee and Fiduciary Services News and Views

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Global Trustee and Fiduciary Services News and Views | Issue 47 | 2017 9
that effectively starts from a consideration of
the position and experience of firms and not of
those of consumers.
Away from immediate consumer protection,
and even as the age of asset management
dawns, and society relies evermore on
individuals to save for their own retirement
provision, fears over financial stability remain.
The UK will continue to play a significant part
in global bodies such as the FSB and IOSCO on
this subject. This will be particularly important
as the discussions on stress-testing funds
ramps up. In the EU or not, the influence of
the UK will, as ever, come down to individuals
and the extent to which Mark Carney or
Andrew Bailey play key roles in committees.
Global engagement
Bilateral engagement among regulators
globally is already high, and shared
experiences of auto-enrolment and RDR will
likely ensure continued engagement with
Australian and Canadian colleagues. For the
funds industry, international questions may
presently be dominated by Brexit. Assuming
single market access is no longer unlimited,
managers will need to understand what the
ramifications are for all the other activities,
such as solicitation, marketing and aftersales
care. But after that come the bigger global
questions. Will the UK outside the EU now
allow Chinese and other funds the mutual
recognition they seek? Mutual recognition
is now a card that the UK government can
play, but so can the EU. There, however, the
experience of the AIFMD may be telling.
Perceived hostility to third country funds is
unlikely to turn to a full embrace in the EU
unless there is a huge political gain at stake.
China, India and Indonesia may offer that,
but the UK is likely to start from a more open
mindset to the concept of third country firms
and funds passporting in.14
In 2008, as the financial crisis spread and
Lehman collapsed, people, including lobbyists,
politicians, legislators, began using a new
phrase to express what financial services did
and why it was important. It was the term,
“real economy”. Debate can be had as to what
is in or out, but its use, indeed its widespread
adoption as a lens through which to consider
what the financial services industry is doing,
institutionalises an “us and them” approach
to regulation and wider financial stability
policy. This division remains a huge risk for
asset managers, perhaps as much as for any
other part of financial services, as it suggests
these allocators of capital to businesses and
suppliers of later-life income are somehow
separate from the world of invested savers (or
saving investors), and are not a component
of the real economy. More than Brexit, more
than the level of an index, more than inflation
figures, the direction of regulation will depend
on the extent to which society and politicians
can be confident that financial services
activities are indeed beneficial for the real
economy and so for human welfare.
Guy Sears
1 International Organisation of Securities Commissions.
2 Retail Distribution Review (RDR).
3 “What Do Banks Do, What Should They Do and What Public
Policies are Needed to Ensure Best Results for the Real
Economy?”, speech by Lord Aidar Turner at Cass Business
School, 17 March 2010.
4 SROs are Self-Regulatory Organisations that, along
with the Securities and Investments Board, enforced UK
regulation until 2001, when they were replaced by the
Financial Services Authority (FSA). The FSA was replaced
by the FCA from 1 April 2013.
5 From
document/rppd/RPPD_Full_20160321.pdf,
last downloaded on 30 November 2016.
6 The fourth principle of good regulation imposed on the FCA is
entitled “Consumer responsibility” and it states “Consumers
should take responsibility for their decisions.” History has
shown this is broadly uninformative.
7 Speech by Andrew Bailey at the FCA’s 2016 annual public
meeting, accessible at
chief-executive-speaks-apm-about-recent-work-and-future-
challenges, last accessed on 30 November 2016.
8 See
our-future-mission, last accessed on 30 November 2016.
9 From
occasional-paper-1.pdf, last downloaded on 30 November 2016.
10 Despite not being gender neutral, the term seemed apposite.
11 From
attachment_data/file/556011/September_2016_Pensions_
publication.pdf, last downloaded on 30 November 2016.
12 See page 32 of FAMR’s final report, available at https://www.
last
downloaded on 30 November 2016.
13 Arguably this is similar to what has motivated the US
Department of Labour, available at
agencies/ebsa/about-ebsa/our-activities/resource-center/
fact-sheets/dol-final-rule-to-address-conflicts-of-interest, last
accessed on 30 November 2016.
14 China, India and Indonesia are only three examples among
others, but these are particularly populous nations.