IMA report identifies minimum €5 billion a year benefits from single European market in asset management

A genuine single European market in asset management would bring economic benefits of at least €5 billion a year according to research commissioned by the Investment Management Association.  A market without existing impediments to cross-border trade could produce an increase in the overall size of a pension of about 9%, or €120,000 for the average investor.

The report - produced by the ZEW (Centre for European Economic Research in Mannheim) under the direction of Doctor Friedrich Heinemann - examines the obstacles to greater competition in the provision of savings products by asset managers.

The report points out that, despite the fact that the UCITS* Directive was agreed 18 years ago to enable investment funds to be sold cross-border within the EU, the market is still essentially local – in most EU countries over 90 per cent of investment funds are still supplied domestically.

The IMA has prepared a position paper, ‘Asset Management in Europe: The Way Forward’, to start a debate on appropriate reforms to achieve this.  Recommendations in the paper include proposals for action by the industry itself, by regulators and by European policymakers. These include:

• new  legislative measures to facilitate cross-border mergers of funds to allow rationalisation and economies of scale;
• removal of unnecessarily duplicative and expensive regulatory processes (such as the requirement to register UCITS in all countries in which they are marketed);
• more use by the Commission of its enforcement powers, including to  end tax discrimination against non-domestic funds;
• standardisation of infrastructure and standardisation and improvement of public data on fund management.

Sheila Nicoll, Deputy Chief Executive of the IMA, said:

“Asset managers are keen to develop a single market for asset management – but are still coming up against lots of roadblocks.  Commissioner Bolkestein has said that it is like driving a Ferrari in second gear and that is exactly how it feels.  The benefits for consumers of a single European market in asset management, and particularly investment funds, are enormous. We have identified a series of practical steps that should move us towards achieving these benefits.  They fit in well with the Commission’s recent proposals to re-invigorate work on completing the internal market.   

“We look forward to a debate with policymakers and our colleagues in the rest of Europe about how to go forward.  In coming weeks, we will be pressing our case at the highest levels in Brussels.  We have set ourselves deadlines to review the position and look forward to reporting positive developments over the coming months and years.”

For further information please contact:
Sheila Nicoll, Deputy Chief Executive, IMA, + 44 (0)20 7831 0898
Alan Ainsworth, Chairman, IMA European Strategy Group, + 44 (0)20 7464 5007
Dr Friedrich Heinemann, ZEW, + 49 (0)621 1235 149
Clare Arber, Head of Communications, IMA, +44 (0)20 7831 0898
Richard Spiegelberg/Jeanette Hamster, CardewChancery, +44 (0)20 7930 0777

Notes to Editors:
The Investment Management Association (IMA) is the trade body for the UK-based investment management industry.  IMA’s members provide investment management services to institutions and private investors  through individual fund management agreements and pooled products such as authorised investment funds. Between them, IMA’s members manage some €2,800 billion worth of assets in the UK of which €1,265 billion is for non-UK clients.  They manage  €6,467 billion worldwide. 

Dr Heinemann based his research on responses to questionnaires from, and interviews with, members of IMA’s European Strategy Group who represent some 30% of companies who sold UCITS in at least five countries in Europe in 2002.

* UCITS stands for Undertakings for Collective Investment in Transferable Securities, the first Directive on which was adopted in 1985.  It covers open-ended collective investment vehicles such as unit trusts, OEICs, SICAVs and fonds communs de placement.