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Press Release

For immediate release: Friday 5 June 2009


Speaking at a conference in Switzerland today, Richard Saunders, Chief Executive of the Investment Management Association said:

"Recent announcements from the Commission imply big changes for the investment management industry.  The industry needs to get to grips with them quickly and work out its priorities while there is still the opportunity to influence them.

The first was the Alternative Investment Fund Managers Directive, published in April.  This has been characterised as introducing regulation of hedge funds and private equity.  But it goes much wider than that, covering all non-UCITS funds in the EU, whether retail or institutional.  That includes UK unit trusts not covered by the UCITS Directive, closed-end funds, potentially some pooled pension vehicles and many others. 

There are real risks from such a one-size-fits-all approach.  All funds will have to appoint depositaries and so-called "valuators" (I just love the EU's capacity to make up new words that sound like English but aren't), despite the fact that there has been no need for this up to now.  In a number of respects the proposed requirements are more far-reaching than the corresponding ones in UCITS or MiFID - for example the degree of liability that depositaries will bear.

The good news in the directive is that these funds will have a pan-European passport, cutting through the maze of differing private placement arrangements currently operating across Europe.  This is a very real opportunity for the industry and is something that IMA has long sought for its members.  But it will not be available for three years after implementation for funds domiciled outside the EU - in the Channel Islands for example - and those offshore centres will be required to demonstrate equivalent regulatory standards.  That will be another source of concern for many.  At the same time it makes the reforms announced in the 2009 Budget all the more timely, as it will become much easier to run sophisticated funds in the UK.

Then just last week came the further announcement from Commissioner McCreevy that the higher standards around depositaries and so on would be imported into the UCITS framework.  This was in response to the revelation that a small number of Luxembourg and Irish UCITS funds were exposed to Madoff to the tune of more than €1 bn.  If it goes through in its present form this could mean significant changes to the business models of UK fund managers and depositaries.  The implications need to be worked out quickly.

What should the industry be doing in response to all this?  Make no mistake.  These reforms are coming, and coming soon.  There is no mileage whatsoever in railing against them.  The political momentum behind them is too strong.

Instead, the approach must be to engage and try to shape the changes.  There is still time to influence the process with well-made reasoning.  The industry needs to work out which points really matter and what it can live with.  It then needs to make its arguments clearly, cogently, and in terms of what benefits the consumer.  If it gets it right there is every chance of benefiting from the new opportunities that will be presented."


IMA is the trade body for the UK's £3.4 trillion asset management industry.  The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.  Its role is to represent the industry and promote high standards.

For further information, please contact:
Noreen Shah, Press Officer, IMA, 0207 831 0898
Mona Patel, Head of Communications, IMA, 07834 089332  

Investment management association