Figures from the industry are overwhelmingly focused on the sweeping data protection rules that take effect from 25 May this year.
A poll of 61 wealth management industry figures attending a recent UK conference overwhelmingly (81 per cent) cited upcoming European Union data protection rules as the most significant regulations for their businesses.
Attendees at the conference hosted by Wedlake Bell and Lanware, a financial services firm, and Investment & Wealth Management Consultants, said the GDPR rules, which take effect on 25 May, were far more of a concern now than the MiFID II reforms of investment and financial markets that took force in January.
Under the EU General Data Protection Regulation, any firm which deals with customer data will be directly affected. Non-complaint firms risk facing potentially heavy fines, including up to 4 per cent of their annual global turnover or €20 million ($24.9 million), whichever is higher. Industry figures have told this publication they are worried that some companies wrongly think they will not be hit because of the UK’s Brexit vote.
Some 15 per cent of those polled said MiFID II was their top regulatory issue, and only 4 per cent said this about the Common Reporting Standard, the cross-border agreements to exchange data to hunt tax evaders.
The introduction of the GDPR will mean that firms will have to adhere to more stringent practices, ensuring that data is better stored with adequate checks and processes in place to protect it. The reform package will punish miscreants and have already sparked debate on whether the industry can adapt efficiently. WealthBriefing is holding a conference on 21 February in London on the topic, and on 7 March in Zurich (see events here and here for more details.)
Although GDPR and other regulatory changes have sparked worry about rising costs and diversion of resources from business growth, Wedlake Bell says the rules can be seized as opportunities by the wealth industry.
“We need to stop regarding regulatory change as a series of sequential siloed projects. Through a multi-disciplinary approach to data management, firms will be able to better protect their data. The GDPR presents an opportunity for wealth and investment managers to assess the risks to their client data and implement procedures to deal with any data breaches,” Rosalyn Breedy, Corporate & Financial Services Partner at Wedlake Bell, said.
The conference revealed that 46 per cent of the event’s participants hold data in more than four places and 40 per cent hold their data in two to three places – only 6 per cent of the attendees said they held data all in one place.
The conference also discussed trends such as business outsourcing and consolidation in the wealth management and wider financial services sectors.