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Europe's Regulatory Juggernaut To Continue Rolling Over Investment Industry - Poll

Tom Burroughes

16 December 2014

As is expected, the end of the year is a time when all kinds of predictions are made for the following 12 months. And apart from trying to figure out what markets might have in store, another set of guesses relates to what the shape of the wealth management industry will look like in a year’s time.

Over at , the US-listed financial group, it recently polled 250 delegates at a tax regulatory forum in London and found that almost three-quarters (71 per cent) of them expect to spend even more on tax and regulatory-related change in 2015 and beyond. In other words, the compliance juggernaut continues to roll.

While at the start of the forum only 41 per cent felt tax and regulatory-related costs would increase in 2015 – and 5 per cent expected to see spending decline, it was clear that debate changed minds, because by the conclusion of the day’s programme, which explored some 20 tax and regulatory changes, the consensus among delegates had shifted significantly.

Among some of the predictions was the view that the fifth iteration of pan-European UCITS funds, or UCITS V, will be an important business area for clients and providers next year. This update to the UCITS fund system is designed to foil crooks such as Bernard Madoff by strengthening depository duties, and making sure UCITS rules fit with the new European Union regime for alternative investment funds, such as private equity and hedge funds. Some 43 per cent of those polled by BNY Mellon said UCITS V will be more costly to deal with than for the Alternative Investment Fund Managers Directive regime, which came into force in the summer.

At this stage, 65 per cent of delegates were undecided as to when they will implement the necessary changes mandated by UCITS V.

One striking result was that when asked if they expect the current wave of regulatory activity to calm down, 38 per cent said it would do so in 2017, and 54 per cent said it will never slow down.

Asked about outcomes for investors, responses echoed findings from previous BNY Mellon surveys. Fifty one per cent of delegates expected investors will see higher costs and less choice – but also better protection.  

On a brighter note, there was marked optimism – 82 per cent of delegates – in that firms also see some opportunities arising from the current changes, with half of those respondents saying these opportunities would be material to their own business.