FCA proposals pose material threat

FCA, threat, PIMFA, Financial Conduct Authority, UK, regulation, fund managers, investment managersPIMFA has argued that the Financial Conduct Authority’s (FCA) proposals to align UK regulation for fund managers and discretionary investment managers pose a material threat.

The trade association for the financial services sector has raised concerns over proposals to bring the regulation of the fund management and wealth management industries into greater alignment.

The proposals seek to improve the international competitiveness of the UK economy, to provide rules better tailored to UK markets and to reduce the impact of operational disruptions.

However, PIMFA has argued the proposals would pose a material threat to management portfolio services and elicit cost implications.

According to the group, harmonisation would result in rules specifically designed for fund management being inappropriately extended to managed portfolio services.

The FCA has been warned by PIMFA that the cost implications of the proposed regulation could make it economically unviable for firms to offer managed portfolio services.

PIMFA also claims the alignment disregards the significant differences between fund managers and discretionary investment managers and creates no additional benefit.

Liz Field, chief executive of PIMFA, said: “New rules that seek to align the way that fund managers and discretionary investment managers are regulated would load unnecessary and disproportionate burdens onto the latter.”

“Moreover, discretionary investment managers would be forced to comply with requirements that have little bearing on what they do and show little understanding of the services they provide.”

The FCA’s proposal will work alongside other changes to regulation to reduce the UK’s current reliance on retained EU law.

Following Brexit, regulators were expected to initially replace repealed provisions with rules similar to those currently in place but ensure they were tailored for the UK market.

However, PIMFA has urged the government to shift the focus of post-Brexit regulatory change to areas where EU-derived rules have failed to meet their objective.

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