WMA confirms strategic review

This article is part of
Discretionary Fund Management - October 2014

The discretionary fund management industry has seen some changes in recent years, including adapting to regulation from both the UK and Europe.

But at its annual conference, the Wealth Management Association (WMA), the trade body for the wealth management industry, recently launched a strategic review into the sector to coincide with the one-year anniversary of the association’s rebrand.

The review, which is ongoing, aims to cover all aspects of the industry and in particular looks at areas such as:

• What should the manifesto be for the retail investor?

• lWhat guidance needs to be developed for the sector so that the WMA continues to support its members?

• What should simplified advice be?

In addition, the WMA plans to use the review to look ahead at what changes it should propose in advance of a new commission and the development of a capital markets union.

WMA chief executive Liz Field says: “There are huge challenges for the sector but also huge opportunities. I want to know the three things that are keeping wealth managers awake at night and how the WMA can continue to support you.”

The WMA has recently submitted its response to HM Revenue & Customs’ consultation on how to adopt the Organisation for Economic Co-operation and Development’s (OECD’s) Common Reporting Standard (CRS), highlighting that regulation of discretionary fund managers (DFMs) and the tax position of these investments continue to rumble on.

In its response, the trade body stated: “WMA and its member firms recognise that everyone should pay their fair share of tax and that a key part of that is to tackle offshore tax evasion.

“At the same time, it is vital that the requirements are proportionate and the costs to both the financial services industry and to the tax authorities are kept to a minimum.

“One way to achieve that is to try and ensure that the Foreign Account Tax Compliance Act, the UK-Crown Dependencies/Overseas Territories agreement, and the OECD’s CRS are as consistent as possible and avoid duplication.”

The WMA also argued that under the current proposals, the lack of threshold for pre-existing individual accounts “will leave financial institutions no option but to check many thousands of relatively small accounts, which, even if identified as reportable, would ultimately yield insignificant amounts of revenue”.

It added: “The costs to both the financial services industry and respective tax authorities is disproportionate to the amounts of revenue likely to accrue.”

As the consultation on the CRS closed on October 22, it was unclear whether the WMA’s concerns will be taken into account. But what remains clear is that for now, it looks like the DFM sector has regulatory issues to consider, and the strategic review could be a good base from which to take wealth management forward.

Nyree Stewart is features editor at Investment Adviser