RegulationMar 17 2014

IMA chief hails impact of 2013 fund reforms

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IMA chief executive Daniel Godfrey said the UK Investment Management Strategy – launched in the 2013 Budget by Mr Osborne – had “brought about significant improvements to the competitiveness of UK funds” and had boosted the “attractiveness” of the UK as a home for investment management.

He said the IMA had worked closely with government departments during the past year as a member of both the Asset Management Steering Committee and the Fund Management Campaign team.

“We are grateful for the government’s significant commitment, and for the energy and urgency shown by your officials, which has already brought about an improvement in the tax rules impacting UK funds and UK managers of funds,” he said.

“[There has also been] the launch of the UK’s authorised contractual scheme (ACS) regime, shortened fund authorisation times and a clearer, but still rigorous, approval process [as well as] a sustainable marketing plan for the UK’s investment management industry and [a] welcoming service for incoming firms.”

Mr Godfrey added that the progress these steps have shown is “outstanding” and “significantly enhances the UK’s competitive position”.

Julie Patterson, the IMA’s director of authorised funds and tax, told Investment Adviser that the trade body has been “proactive” in its position of lobbying for the UK and that it was now “anticipating developments” in regulation rather than reacting to them.

She said the relevant bodies with which the IMA had been working – including government departments and the FCA – had achieved nine changes in just nine months since Mr Osborne announced the UK Investment Strategy last year.

She said: “I knew we would make progress, but to achieve nine things in nine months is fantastic. And these are not small things.”

Ms Patterson said that the changes implemented to improve the attractiveness of the UK as a centre of fund management included the abolition of Schedule 19 stamp duty reserve tax.

This was levied on the managers of UK-domiciled unit trusts and Oeics, but was usually passed on to clients in what Ms Patterson described as a “double whammy” of charges.

She added that the Treasury had also removed the requirement for fund managers to withhold tax on rebates paid to overseas investors; that funds domiciled outside the UK but run by managers here are no longer liable for tax; and that tax-transparent fund structures have been introduced.

Ms Patterson also said the fund authorisation process that had started to “become inefficient” had been “smartened up”, adding that the FCA had committed to “[reducing] the turnaround times of fund authorisation”.

“We had one meeting with the Treasury and the FCA and sorted this out,” she said.

“The application forms have multiplied in size [over time] by a factor of six. This is not about making it a weaker process, though, but making it clear what is needed.

“There is better information on the [FCA] website now, and we have agreed to have regular dialogue. The FCA has made a public commitment to timescales, and to do that it will have to make sure it is resourced properly.”

What next for Daniel Godfrey and the IMA?

IMA chief executive Daniel Godfrey has praised chancellor George Osborne for his efforts to make the UK an attractive place for the financial industry.

But the body is keen, as director of authorised funds and tax Julie Patterson has said, to make sure its approach is “proactive”.

Mr Godfrey (pictured) has urged Mr Osborne to consider further steps to solidify the UK’s attractiveness as an asset management hub. He said the chancellor should consider removing stamp duty land tax (SDLT) from property fund structures such as property-authorised investment funds (Paifs) and authorised contractual schemes (ACSs) as it has “prevented” launches.

“We understand that a number of UK life companies and managers of offshore funds have an interest in converting existing UK property holding into a Paif or an ACS,” he said.

“A targeted SDLT seeding relief will enhance the effectiveness of and the ease of converting/re-domiciling funds, with benefits to investors that all types of income will be taxed correctly and benefits to UK plc of funds domiciling here.”

Mr Godfrey also has other demands linked to qualifying investor schemes and double tax treaties, as well as ensuring the UK’s long-term pensions and savings regime “remains attractive for individuals to invest for their financial futures”.

Under the leadership of Mr Godfrey, the IMA is not afraid to roll up its sleeves. Yet more could be achieved by the body, and it seems its present mindset means things will get done.