EFAMA KPMG Solvency II Report

4.5 Other Regulations
4 WORKING GROUP FINDINGS | 55
In addition to Solvency II, the investment management industry is grappling with
wide-ranging regulatory reform addressing issues from systemic risks to investor
protection, transparency, governance, shadow-banking and taxation. Balancing the
competing demands of various regulatory agencies is a huge challenge.
This is especially the case for globally diversifi ed firms who need to make sense of
those demands and bring them together in a comprehensive and cost effective way.
While technology has been an enabler for global expansion, the many overlapping
regulatory initiatives including the revision of Undertakings for Collective Investments
in Transferable Securities (UCITS), review of the Markets in Financial Instruments
Directive (MiFID), the Dodd-Frank Act, Packaged Retail Investment Products Directive
(PRIPs) and Foreign Account Tax Compliance Act (FATCA) among others, could create
barriers to growth. Addressing these initiatives and making the requisite changes
to the business, will likely add more cost and complexity to the manufacture and
distribution of investment products.
How to protect consumers from unnecessary risk by enhancing transparency has
been at the heart of regulatory change since the crisis. This has resulted in a variety
of initiatives some of which focus on improved disclosure (PRIPs) across institutional
and/or Retail Distribution channels (e.g. the adviser registration requirements under
the Dodd-Frank Act) and others such as the Alternative Investment Fund Managers
Directive (AIFMD), focus on bringing previously unregulated or ‘light touch’ sectors
(private equity and real estate) into the regulatory net.
There has also been a shift, more so in Europe than other areas, towards giving
regulators the ability to ban Products, which is a theme in the update of MiFID, giving
the European Securities and Markets Authority (ESMA) the power to step in at a
national and European level. Adapting to the requirements of UCITS is a major focus
for all investment managers and funds from a European perspective this year, with
further work on strengthening and harmonising the framework.
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