Steady under fire: Richard Saunders, IMA

Richard Saunders, outgoing chief executive of the Investment Management Association, has had an interesting time of late.

In recent months the trade body, which Mr Saunders has headed up since its formation in 2002, has been at the centre of multiple controversies, including over its role in sector classification, which one think-tank described as the actions of a “quasi-regulator”, and its support of the total expense ratio as the best cost measure even though it excludes trading costs.

What is occupying the time of Mr Saunders? Currently, he says his plate is mostly full of incoming European regulation, although he is still taking the time to guide peers at the House of Lords through the labyrinth of the Financial Services Bill.

European legislation in the pipeline that the IMA is focusing on includes Mifid, Ucits IV, Prips, Basel III and, to a lesser extent, Solvency II.

“The thing that consumes the most time and energy is the European agenda. There is a lot of stuff coming out of Europe at the moment. We spend more time in Brussels than Westminster or Canary Wharf.”

“All these things have implications for fund managers.”

On sector classification

So what does he make of the contentious issues that have been debated so vociferously recently?

On sector classification, some critics have been asking if the IMA should be responsible for such classifications at all. Michael Johnson, research fellow at the Centre for Policy Studies, is in the process of publishing a paper which calls for the association to scrap this activity altogether.

However, Mr Saunders says that this is a criticism that is regularly levelled at the association. As for the report itself, he simply says it is “not the most rigourous of documents”.

“I have been in the job 11 years and there is always sport around the IMA sector classifications. They have impact commercially on firms and that is why firms like the IMA doing it because we are an impartial party unlike the data pushers.

Criticism such as Mr Johnson’s “comes with the territory”, Mr Saunders adds.

“The sectors is an area where you will never please all the people all the time and those rise from perfectly legitimate commercial interests.

“On Arch Cru, there have been attempts to say that the IMA classified the fund as ‘cautious’. It was actually Cautious Managed and we admitted that that had problems and had it changed.

“The sector system evolves and will continue to evolve and continue to be controversial.”