Pre-1999, this organisation’s member companies represented the best of breed in their regions but accused its governing body of mismanagement, poor decision-making and old-fashinoned bureaucratic thinking.
At the same time, the governing body looked at its member companies and saw too many of them, with too many ‘me-too’ products, with too much control exerted by the very few meaning the interests of the majority were often railroaded by the clout of the minority.
It bred laziness and average performance in a lot of cases, with investors happy to accept this as they knew little else.
The governing body took the monumental decision to make sweeping, radical changes, to be open and transparent in everything it did, and to put its investors, not its member companies, first.
Unsurprisingly its member firms saw this as the first step towards the end of their market dominance, and even to their very existence in some cases, but the important thing is that it was the right thing to do. And this has been proven right in spades.
To be honest if some of the member firms had gone bust, irrespective of their history, pedigree, previously strong records etc , then so be it. They operated then as they do now in a market-efficient environment and the new structure has taught them what they really ought to have known – that they should take advantage when conditions are good but when things turn against them, they need to dig in and take personal responsibility rather than relying on others to bail them out.
What we have now is a world class product, something that is sustainable because it takes a long-term view, has the right people’s interests at heart, is run for the end investor, who is then prepared to pay for the returns it gets.
It may surprise many when I say the investment management industry could learn a lot from the ECB – but hopefully not when the ECB in question is the England & Wales Cricket Board.
