The Chinese are often credited with the saying, “May you live in interesting times”. No one knows where the saying actually originated but far from being a blessing as it first seems, it is in fact a curse.
It is a curse that could easily have been cast on the UK investment industry, given the volume of regulatory consultations progressing through the UK and Europe’s policymaking machines today.
Last year, the Investment Association responded to 17 consultations and discussion papers from the Financial Conduct Authority alone. HM Treasury received three responses, 16 were provided to European Securities and Markets Authority, four went to the European Commission and one went to the European Banking Authority.
A mission for clarity
In fact, we submit a major response about once a week, and that is excluding our submissions to bodies such as the Financial Reporting Council, International Financial Reporting Standards, Department for Work and Pensions, the Takeover Panel, HM Revenue & Customs and our continual day-to-day engagements.
One of the biggest challenges in running a trade association is making it clear what you actually do. So, in my time as interim chief executive officer, I have made it my mission to create clarity around what we do and who we represent.
When the Investment Management Association (IMA), our predecessor, took over the Investment Affairs division of the Association of British Insurers in June 2014, we reached a milestone. Investment Affairs was the division that carried out corporate governance research on behalf of insurance companies, which own significant amounts of equity in UK-listed companies.
The full chain
In taking over Investment Affairs, we for the first time became a truly end-to-end investment body. We now cover the full investment chain, starting at the point an investor decides to give their money to a pension, adviser or fund platform and ending with the companies that receive the investment.
Despite that transition, remnants of our structure as the IMA remained entwined in the fabric of the organisation. That is why my first major act was to create a new structure for the Investment Association, with three divisions.
First, we have our business support and promotion division led by Jorge Morley-Smith, who is director of firms, regulation and tax. This division is concerned with helping our member firms, more than 200 asset managers and 70 affiliate members running £5.5trn of assets, to navigate the tax, regulatory and legal maze.
We assess new regulatory structures and propose ways to structure a business effectively within them. Threats to our businesses such as financial crime and market abuse are analysed. We engage robustly with the world’s regulators to ensure they do not needlessly inhibit our industry.
Second, our products and services division is led by Jonathan Lipkin, director of public policy. This ensures the investment products and services our members offer – chiefly funds and segregated mandates – are able to deliver for their clients.
This calls for significant engagement with European regulation, for example the Ucits directive that lays out the structure used by most of our industry’s fund products.
The division produces world-class technical research on investor behaviour, fund performance and the long-term viability of the UK’s pension system. It is responsible for our annual asset management survey, the authoritative view of industry trends.
Third, our sustainable investments and capital markets division is led by Galina Dimitrova, director of markets, and includes Andrew Ninian, our director of corporate governance and engagement. This division focuses on ensuring markets function well, and in investors’ best interests.
This division covers regulatory engagement, for example with the European Capital Markets Union’s plan to integrate the region’s markets and the sprawling Mifid directive. We work to ensure the audit reports produced by listed companies are sound and comprehensive. Significant corporate governance work is carried out covering the FTSE 350, to inform portfolio managers as they consider their votes at companies’ annual GMs.
I hope it is clear how the new structure tracks through our member firms, their products and the markets those products invest in. Asset managers must be prepared to change and evolve to embrace the new age of asset management as the rise of defined-contribution pensions, the decline of annuitisation and auto-enrolment shifts our industry to a greater role in society.
With our recent changes, I hope we have shown that the Investment Association is prepared to change and evolve as well.
