Regulation at the Forefront for U.K. Funds, Finds Northern Trust

Just under half of respondents to a Northern Trust survey believe continuous regulatory reform is the single largest driver of the U.K. funds industry.

Whilst the survey results indicated that regulatory reform is the driver in the evolution of the U.K. funds industry, most respondents (74%) thought their investors saw regulatory implementation as a cost overhead with limited value.

Around a quarter of respondents claimed investors valued the added protection, transparency and clarity they get as part of increased regulation.

The findings are in-keeping with a previous survey conducted by Northern Trust in 2013, in which two thirds (66 percent) of fund managers said they primarily viewed the AIFMD as a compliance exercise, despite the creation of a pan-European passporting system that aimed to make distribution easier and therefore help investors.

In addition, over half of respondents believed new fund launches would trend towards the U.K. onshore market, which could provide the U.K. as a significantly competitive domicile.

“It comes as no surprise that the complexity of regulation can sometimes cause the overall benefits to become unclear,” says Darren Banks, head of Northern Trust depositary services for the UK.

“The U.K. is Europe’s leading market for fund management and it’s important to ensure the market remains competitive.”