UK fund managers have called on the next government to protect cross-border investment arrangements and secure close alignment with EU rules post-Brexit.
Entering the fray of general election campaigning, the Investment Association (IA) also warned against a no-deal Brexit, calling it “the worst possible outcome for UK investment managers”.
In an industry manifesto released today, the IA said the UK’s future relationship with the EU should be “underpinned by regulatory cooperation” and must focus on preserving managers’ ability to offer investment products cross-border.
Under current arrangements, funds domiciled in one EU country can be run by managers based in another. The majority of funds offered to UK investors are domiciled in the EU under these rules.
The group said that further action was needed to prepare the industry for the “worst possible” outcome of a no-deal Brexit.
Citing the loss of passporting arrangements covering the cross-border sale of funds and the need for the UK to retain equivalence in clearing houses, the IA said it was “particularly vital that plans already made are not changed”.
The head of the UK’s financial regulator has previously called for equivalence between the UK and EU post-Brexit.
Speaking in September, Financial Conduct Authority boss Andrew Bailey said overlaps between UK and EU share regulations post-Brexit would damage markets “to no good end”.
Brussels has warned that if the UK leaves without a deal, EU investment firms will have to trade euro-denominated shares within the bloc, not in London.
In today’s manifesto document, the IA said fund managers see it as crucial the UK does not leave the EU “without a negotiated agreement” to protect investors and the industry.
It added that the country should be given a “strong voice” in the development of future regulation, both at European and global levels.
“it is not appropriate for the UK to be subject to rules which UK policymakers have not had a meaningful role in shaping,” it said.
IA chief executive Chris Cummings said the investment industry was “one of the jewels in the UK’s financial services crown”.
“The UK is a global centre of excellence for investment management and we need to maintain and continue to promote the role we have established as we seek out new frontiers post-Brexit,” said Cummings.