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Magazine Issues » June 2012


Peter_de_ProftPeter de Proft, head of Efama, relies on his members to find a collective voice in Europe. He tells Nick Fitzpatrick that other financial industries are gravitating towards more reasonable common ground.

It is coming up to five years since Peter de Proft became the director general of the European Fund and Asset Management Association (Efama) and the last half a decade must have been the busiest period for any chief of the trade body. This is due, mainly, to the pace of change in the regulatory landscape.

“There has rarely been a day over the past five years when I’ve not been working. Even holidays,” he says.

With a staff of only 13, Efama has a lot to contend with. It is not only a case of contributing to discussion papers issued by Brussels (where Efama is also based). It’s also about being heard above the cacophony of interests vying for attention from numerous other trade bodies, such as the Alternative Investment Management Association, which represents hedge funds, or various bank organisations like the Association for Financial Markets in Europe (Afme).

To be heard effectively, de Proft has to marshal Efama members – mindful of their different business models and needs – so they speak as a single ‘bloc’ in dealings with European and American policymakers.

By now he must be an expert at herding cats. Or is it not as bad as all that?

De Proft says Efama’s official viewpoints are usually reached with an 80% agreement.

This common voice has to be found not only among 26 national trade bodies, but also among 59 corporate members, tying together the interests of large fund managers with small ones, and the views of independent firms with those that are owned by financial giants. The task is to reach the “golden middle” between two extremes of views, says de Proft. But this Aristotelian position – the definition of compromise – is not always easy to get to.

De Proft acknowledges that after the Bernard Madoff fraud came to light, calls from France for tougher depository laws had to be balanced out with less extreme views, and that currently the proposed Financial Transaction Tax sees more strident opinions emanating from the UK.

De Proft finds that it can be a lot easier to obtain agreements once people are sitting around a table. “One of my most interesting experiences in the past year was with the ETF [exchange-traded fund] working group. When all the people were around the table they were much more moderate in their expressions and progress was made.”

But what about when trade bodies representing the gamut of financial service interests are sitting around a table? Can they reach a common viewpoint?

Common ground with bankers
The British Bankers Association (BBA) still describes itself four years after the collapse of Lehman Brothers as “the voice of banking and financial services”. Inherent in this logo is the presumption that it can speak for fund managers and other savings industries. Critics might argue this shows how the BBA has self-appointed itself through the glass ceiling of industry representation.

Do banks try to speak for fund management? “It used to be like that,” says de Proft. “But we are far from the pre-crisis arrogance now.”

He points out that Afme, whose members are predominantly global and European banks, courts Efama for discussions.

De Proft adds: “There is a perception that approaches from different industry groups are split. The last time I saw this was in 2008 when discussions about central counterparty clearing for over-the-counter derivatives started with Charlie McCreevey [then internal markets and services European commissioner]. Ten investment banks walked out of the room. That was the last time I saw something like that and the last time I nearly got very angry.”

He adds that Efama has lines of communication with other trade bodies and holds open hearings with them. “We have a certain amount of common interests. Many of our larger members have hedge funds and private equity businesses.”

There has been a difference of opinion about whether private equity vehicles should have to use depository banks for safekeeping of assets, like traditional public equity managers do. Efama has advocated their use in the small and medium-sized enterprise sector, while the private equity industry has been largely against them. Efama’s view was that a depository could prevent a fund from failing. This is important because a fail could turn public perception of all kinds of investment funds sour.

More generally, there has been a big effort by the funds industry in recent years to make savings and investment products offered by other financial services providers subject to the same kind of regulations as funds to ‘level the playing field’. In Europe, this issue centres on the packaged retail investment products initiative.

De Proft will have been director general of Efama by mid-September, so in these five years, and since the pre-crisis arrogance of the banks has somewhat evaporated, is he finally seeing any signs of a greater product standardisation in the interests of the consumer?

“Since the crisis, there has been more transparency. Distribution networks know they have more responsibility now about what they are selling to customers. These days, I see more openness than reluctance from insurers and networks. There are different points of view, but we respect that.”

Post-crisis regulation has propelled the work of trade bodies. All their industries are affected. Afme, for example, has opened a Brussels office in recent years and expanded its staff. Efama itself is looking to recruit about two extra people.

And in what may reflect the increasing internationalisation of industry issues – regulatory and otherwise – the Investment Companies Institute (ICI) from the US launched the ICI Global group last year in London, with Dan Waters, formerly of the UK’s Financial Services Authority, as its head. Also, it is understood that the Managed Funds Association (MFA), also from the United States, is considering setting up a European group. MFA had not responded to enquiries at the time of going to press.

With the pressure of these economic times making everyone examine the value they get from external services, de Proft recognises that members expect Efama to perform. Membership is not free and members often already pay one layer of fees to a national association.

Also, small fund managers pay the same fee as larger ones; they would not stand for Efama skewing its views to the larger firms. This adds to the challenge for Efama of being able to project a common voice.

But for de Proft, the end result is a compromise of views that normally should be received well, he believes, at the European Commission.

©2012 funds europe