2019 – Illusions or opportunity?
2019 continues the themes from 2018 for asset management in the UK. With the glide path towards Brexit looking increasingly like a cliff edge, managers will need to take some protective steps – particularly if their distribution assets are likely to remain in Europe.
Many of the risks in asset management remain unchanged – whether in relation to valuations, leverage, operations or product suitability. But there are additional risks that will need to be navigated through in 2019 – such as in relation to the potential loss of corporate memory from earlier crises and the opportunities that may arise from the inevitable regulatory arbitrage that is likely to develop over time as both Europe and the UK maximise on their respective competitive advantages.
Fin Tech and AI should increase efficiencies in asset management but it remains a moot point as to whether those efficiencies will be used to benefit customers or maximise the bottom line for managers. The hope remains that it is both who will ultimately benefit. Costs remain an issue and although much progress has been made over the year on transparency – some of the fundamental issues in relation to conflicts of interest and governance remain unchanged and will continue to muddy the waters on these efforts. Customer classification is still a problem area as the protections for customers need to exist in the relationship between the fund manager and fund service providers rather than the fund and the customer. And the current focus on transparency does not address this fundamental issue.
It is also time for a new incarnation of the IGC – although the concept has slowly embedded itself – it is time to renew this with greater independence being exercised for the benefit of customers.
Diversity remains an area for attention on boards and independent governance committees that need to go beyond gender diversity although there is much to be done even here.
Jaitly LLP continues to work with its clients on due diligence, corporate governance and operational risk that impact on these issues.
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