Independent Investment Management Initiative – Response to FCA Consultation Paper CP 24/2 – ‘Our Enforcement Guide and publicising enforcement investigations–a new approach’
IIMI welcomes the opportunity to respond to the FCA’s Consultation Paper CP 24/2, Part 2. However, we do not believe that the FCA has demonstrated a sufficient need to introduce these proposals. The case for change has not been sufficiently made. Alternative approaches, which would be less harmful to smaller businesses and better align with the FCA’s competition objectives, have not been sufficiently explored before advancing these proposals.
As a representative body for small boutique investment managers, we recognise the importance of maintaining market integrity and ensuring investor protection. However, we have significant concerns about the proportionality of the proposed measures, particularly regarding the principle of “innocent until proven guilty” and the cost implications for smaller firms.
Author: IIMI Admin
Dear Rachel Reeves and Tulip Siddiq, 12th December 2024
As a group of over 50 entrepreneurial specialist investment managers, predominately based in the UK, we share your vision to deliver the long-term, sustainable and inclusive growth of the financial services sector in the UK. We strongly believe that small businesses, including specialist investment firms are the engines of growth. Our membership represents over $500bn in client money and around 3000 members of staff and we work closely with the regulators, the government and the City of London supporting you with your mission to promote a competitive and world leading asset management center with client outcomes at its core.
Dear Lord Forsyth, Committee Members, 28th November 2024
As a group of over 50 specialist investment managers, predominately based in the UK, we welcome the focus of this inquiry. Led by consultation with our members, we have several constructive ideas which could help embed the objective of international competitiveness and growth. Particularly as smaller and independent managers, we fear that progress towards this objective has thus far been limited. We are hopeful that the findings of this enquiry can help address this.
We strongly believe that small businesses, including small and specialist investment firms, are engines of growth. However, there are significant costs and complexities of starting an asset management business in the UK. We are often compared with our US counterparts who have much lower barriers to entry and hence entrepreneurial businesses can be born with greater ease. Enabling the development and scaling of small businesses should be part of the scope of the FCA’s secondary objective. Regulatory costs disproportionately impact smaller
firms, given their resource and capital constraints. These raise barriers to entry and discourage entrepreneurs (unless they have access to significant pools of capital, which has implications for diversity as well as growth and innovation in our industry). It also reduces investment choice and feeds the ever-growing challenge of consolidation in our industry. We therefore welcome moves towards regulatory rationalisation, as well as harmonisation with international standards. This must, of course, be done in ways compatible with the FCA’s objectives regarding consumer protection and market integrity. We see many ways in which they can be mutually reenforcing.
It has now been over one year since The Consumer Duty came into force. We have responded to the FCA’s Call for Input on the Duty, in conjunction with our members, with a view to supporting the regulator to identify challenges that smaller asset managers have had with embedding the Duty and evolving this important piece of regulation for the benefit of retail customers.
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Regulatory Reform
Following her appointment as chancellor, IIMI has written to Rachel Reeves to share some ideas for regulatory reforms with a view to promoting a competitive and inclusive UK asset management industry. This letter was written in consultation with our membership and has been shared widely within the industry.
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IIMI reaches record 50 members
The Independent Investment Management Initiative (IIMI), a member-led industry group that represents specialist investment firms, has just welcomed its 50th member. The think tank which has seen a 43% increase in membership over the past 12 months, has welcomed 15 new members in the past 12 months. These include 49th member, sustainability start-up Rebalance Earth founded by Robert Gardner’s (co founder of Redington and mallowstreet), and its 50th member CG Asset Management, which manages the FTSE 250 listed Capital Gearing Trust, among other funds.
Dani Hristova, Chief Executive Officer for IIMI, commented: “The growth of our membership signals the importance of our collective voice within the asset management ecosystem. I’m also delighted that, as we have grown, our membership has diversified further. We now support more businesses that provide critical infrastructure and services to boutiques for example, ACDs and distribution partners. The regulatory, operational and commercial headwinds for smaller firms remain disproportionate and I’m proud that through our collective efforts, we’re able to ease some of these pressures and help firms to thrive. It’s imperative that investment specialists compete alongside global asset managers so that we can increase investment choice and ensure good client outcomes”.
Chris Taylor, Chief Operating Officer of CG Asset Management said: “We are delighted to become IIMI’s 50th member, especially at a time when independent firms are playing an increasingly vital role in the investment landscape. IIMI’s work in championing the interests of specialist firms like ours is invaluable, and we are eager to contribute to the collective effort. It’s crucial that boutique managers have a voice in shaping regulation and ensuring a competitive market, so that we can continue to deliver the best outcomes for our clients.”
About the Independent Investment Management Initiative:
The Independent Investment Management Initiative (IIMI) is a member-led industry think tank representing specialist, entrepreneurial investment boutiques that are entirely focused on and aligned with the interests of their investors.
Founded in 2010, the IIMI counts amongst its 50 members some of the world’s leading specialist asset management firms, overseeing over c. $640bn in client assets and representing c. 3,000 members of staff.
Over the past two decades, as the financial services industry has been dominated by global giants, an increasing appreciation of a traditional ‘client-centric’ approach has enabled entrepreneurial firms in the UK
and beyond to emerge as a growing competitive force. The IIMI offers these firms an expert voice in the debate over best practice and the future of financial regulation, with the aim of building a better future for smaller and independent asset managers that prioritise specialism over scale in delivering the best results to clients. The IIMI has three core aims: to shape a regulatory environment that supports boutiques and promotes competition, to promote the strengths of boutiques and facilitate commercial opportunities for members, and to drive best practice across our membership.
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Emma Murphy, Quill PR: emma@quillpr.com 07872 604 413