Following on from my previous blogs, the third question we asked in the survey during my recent webcast was “Which regulation is causing you most concern?”
The result set had 5 options:
– Retail Distribution Review (UK)
– Solvency II (Europe/ Global)
– UCITS V / KID / KIID (Europe)
– FATCA (US / Global)
– Other….
As I would have expected, respondents indicated Solvency II is the regulation that is causing them most concern.
What I was a little surprised with, was that FATCA, RDR and UCITS V/KID were all equally ‘second’ the terms of concern. Specifically what surprised me was that FATCA was not the stand-out focus behind Solvency II.
I can honestly say that in my 13+ years operating in this market I have never seen a piece of regulation have such a profound impact as that which Solvency II is having today. Now clearly if your domain of focus is T/A and maintenance of share/unit holder records then FATCA is without doubt having a life changing impact on your business – but for the rest, Solvency II is a game changer.
What is most disconcerting though is that Solvency II is a piece of regulation that emanates from the European insurance industry, yet it is having a global impact on investment management businesses which are exposed to existing insurer-led mandates, or which have a specific institutional focus on attracting insurer AUM.
For many investment managers there is a lot of well-founded fear of the unknown, because while at face value their direct book of record may not indicate a large exposure to insurer investments, many are completely unaware of their indirect exposure via e.g. fund-of-fund investors which in turn have exposure to the insurance industry.
I was not surprised that RDR featured in joint second place in the response – this correlates strongly with the upcoming enforcement, same for UCITS V – this has a lot of visibility as there have been updates from Brussels last month that elaborated on previous information updates.
There was a high percentage of ‘other’ in the response and I understand that this may relate to EMIR (European Market Infrastructure Regulation) which I will cover some other time.
In my next post I will consider the final question in the survey “What is your biggest challenge in getting your investment product data to market?”
Talk soon….
