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IMF at risk of stifling industry with over-regulation: IA

IMF at risk of stifling industry with over-regulation: IA

The International Monetary Fund is at risk of stifling the industry with too much regulation following its report which called for strengthened oversight of the asset management industry, Richard Metcalfe, the Investment Association’s director of regulatory affairs, said.

Last week, the IMF published a report which argued that securities regulators should shift to a more hands-on supervisory model, supported by global standards on supervision and better data and risk indicators.

Speaking to FTAdviser, Mr Metcalfe admitted there were “some risks” with introducing regulation for its own sake, stating that it may stifle the industry.

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He said: “It will put up costs and make asset management that much less accessible - it doesn’t reach a huge amount of the population already and we want to reverse that.”

Mr Metcalfe added that further regulation could also create even more of a need to consolidate - which is not a systemic problem in itself but may be bad for competition in that it will reduce it down.

However, Mr Metcalfe did say that in general, the Investment Association agrees that there should be some sort of greater oversight in the industry, and that the IA’s starting point was to take the data and go from there.

He said: “It is not our contention that there is something fundamentally wrong with the asset management industry.

“You need to take into account the amount of legislation addressing the system overall. If one was being sensible about this there would have to be differentiation in different forms of asset management.

“This is beginning to manifest itself in global work, for example the FSB and IOSCO looking at leverage and talking about thing like whether you can harmonise approaches internationally with regard to tools managing outflows.

He added that it is helpful that there’s consistency of approach depending on where you exist geographically.

“We fully expect there to be some sort of methodology for designating funds that are systemically important - the question is what do you do with that designation?

“We want to be doing this on a globally consistent basis - the last thing we want to end up with is something which obscures whatever picture is to be drawn.”

ruth.gillbe@ft.com