25 October 2017

The outcome of Brexit is uncertain, but strict regulation is here to stay.

Brexit has brought about uncertain times for the investment industry. Since the recent announcements by Theresa May to move away from EU regulation, this has spouted further debate and uncertainty for asset managers, including whether to keep their core business in London, or move to a more central European hub.

As negotiations continue around the fate of the once united European investment industry post Brexit, companies are hedging their bets and starting the ball rolling on their future plans, and the outcome is not looking good for the current central financial hub, London. As companies fear less access to their European markets, they are looking at possibilities to move their head offices and according to Ignites Europe, Luxembourg and New York are the top destinations.

Financial Conduct Authority (FCA) chief executive officer Andrew Bailey, is calling for free trade in asset management post Brexit and is urging for the “most favoured nation principle”, which means countries offer same-trade terms to all its partners. He is encouraging this to preserve the ‘open financial markets’ between the UK and EU, and if accepted this will ease the potential restrictions, and ensure continued ease of trade.

Lee Godfrey comments ‘At present there is no absolute certainty, however, asset managers should take the necessary steps to ensure their businesses remain efficient and all data is accurate, so they can adapt to regulatory change quickly.

In my opinion, Luxembourg and London will maintain a very close relationship, with a healthy approach towards managing business headquarter relocations. Regardless, the asset management industry need to ensure they can adapt seamlessly.’

What is certain is that regulation, no matter in what form, is here to stay. The priority to ensure the end investor is treated fairly and with transparency will remain, and putting processes in place to ensure efficiency and adaptability is key.

Godfrey explains ‘KNEIP has developed an online digital platform that can give control back to asset managers and ensure their data management and reporting processes are transparent, streamlined and always compliant, no matter what countries their funds are distributed in. We are at the forefront of knowledge when it comes to regulatory change and are confident that no matter the final outcome of Brexit, we will keep our clients fully compliant. Our top priority is to support our clients in making the investment and insurance industry a better place for all investors.’

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