Huge changes in the global regulatory environment continue to have a massive impact on the financial services sector. Although giving better protection to investors, these regulations are coming at some cost both to customers – who are being overwhelmed by communications from financial institutions explaining the new norms – and to institutions which face extra costs to implement them.

New regulations include1:

  • MiFID II. The regulations, which came into force in January 2018, set out comprehensive rules for businesses across the EU that provide investment services and activities. These cover investment intermediaries and bring about significant changes in investor protection, market structure, market transparency and market abuse.
  • PRIIPs (Packaged Retail and Insurance-based Investment Products). These new regulations stem from a European Commission initiative to harmonise disclosure and selling practices for all substitutable retail investment products sold in Europe. They also came into force in January 2018 and introduce standardised disclosure for all retail products in the form of the Key Information Document.
  • SMCR (Senior Managers & Certification Regime). In the wake of the financial crisis the UK recommended the development of a new accountability and increased responsibility system, focusing more on senior managers. The SMCR has applied to banks, building societies, credit unions, and investment firms since 2016, but the FCA has published a paper consulting on extending SMCR to almost all other financial services firms.
  • Retail Distribution Review (RDR). In the UK, the FCA has pushed back a review of the impact of the RDR, first introduced in 2012 to improve standards of advice and transparency, until 2019. The regulator says it will combine it with a planned analysis of the Financial Advice Market Review (see below) in 2019. The FCA said the delay would give the market time to react to the regulatory change from both FAMR and MiFID II.
  • Financial Advice Market Review (FAMR). Launched by the UK Treasury and the FCA in 2015. In its final report it set out a series of recommendations designed to tackle the barriers to consumers accessing advice and guidance.


A recent survey from the Investment Association1 (IA) reported that over the past decade a combination of regulatory and policy drivers have created significant opportunities and challenges for the asset management industry. These drivers include:

  • An accelerating shift to individual responsibility for long-term saving in a Defined Contribution (DC) landscape that has seen the automatic enrolment of over 8 million people since 2012. Automatic enrolment has also been accompanied by a liberalisation of the retirement income regime in the UK.
  • In the post 2008 economic, regulatory and policy environment, broader economic concerns have driven a variety of initiatives across Europe such as the Capital Markets Union (CMU). The CMU seeks to boost investment flows and economic growth by providing business with a greater choice of funding at lower costs, as well as make the financial system more resilient.
  • An increasing debate about issues of sustainability, particularly in the context of concerns about the impact of climate change. This is linked to broader themes around responsibility, extending into the social arena.
  • Transparency is a theme running through UK and EU regulation for both client reporting and underlying market activity. The transparency question further extends into how clients are informed about the investment process.
  • Oversight internally and externally. The question of internal oversight is picked up strongly through MiFID II product governance and target market requirements.

As the IA conclude, these themes build together into a wider debate about the question of how asset managers provide value for money for clients, whether in the institutional or retail market.

1: The Investment Association Annual Survey Sept 17

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