RDR was six years in the planning and has now been in place for just over a year at a cost to fund managers and wealth managers running into millions of pounds – I defy anyone to put a more exact figure on the costs as it is simply not quantifiable.
Contradiction of terms
Nor is it easily understandable, the majority of end investors have never heard of it and they wouldn’t understand it if anyone did take the trouble to explain it to them.
Either way it could soon be irrelevant as earlier this month, the European Union agreed the terms (but not the detail) of MiFID II which may over-rule many of the bigger changes that RDR brought in.
Again, the devil is in the detail as, for example, the UK and Europe disagree on the definitions of restricted and independent. Far be it for me to say that given both words are actually English then maybe the English definition of those English words would suffice…because the contention lies in the practical implications of what the two words mean.
In its simplest form, these practicalities revolve around how wealth and fund managers (and the end investor) will react to MiFID allowing commission payments that RDR worked so hard to ban.
Up for the fight
Last night, I heard Christian Dargnat, president of EFAMA (European Fund and Asset Management Association) since June last year, speak to politicians about how he wanted to see a return to supervision rather than regulation.
The very impressive Dargnat, also the chief executive of BNP Paribas Asset Management and CIO of BNP Paribas Investment Partners, was speaking at a reception at the House of Commons hosted by EFAMA and the IMA.
Earlier in the evening David Gauke, Exchequer Secretary to the Treasury, talked about how UCITs led the way in European fund regulation. Dargnat, while agreeing with the sentiment, countered this by saying we are now at UCITs IV – or is it V or even VI? – with five reforms introduced in the past four years.
MiFID 2: RDR 1
His main concern is the volume of regulation which had been imposed on the asset management industry since 2007 and the global financial crisis. His view is that industry is “the solution, not the problem” and is calling for a far more sensible approach.
What his role at EFAMA will increasingly include is the lobbying of European politicians, working alongside those not in Europe but very much part of it (i.e. the UK through IMA chief executive Daniel Godfrey). He will have his work cut out but the more he can do to stop UK fund and wealth managers go through something as huge as RDR and then have it revoked by MiFID has to be encouraged.
