27 September 2012

IMA reminds ESMA that asset managers are not banks

In its response to ESMA's consultation paper, "Guidelines on Sound Remuneration under AIFMD", the Investment Management Association (IMA) has reiterated that asset managers are not banks and should not be treated as posing the same systemic risks.

Any remuneration policies for asset management firms must take account of this important difference and be proportionate to any risks posed. In addition, there is a patchwork of regulation on remuneration, meaning that many asset management firms will have to comply with not just one but four sets of EU guidelines. IMA favours instead a broader principles-based approach which would allow firms the flexibility needed to fit in with the circumstances in which they operate.  

Guy Sears, IMA’s Wholesale Director, said: “One of the roots of the financial crisis was the huge bonuses paid by banks for short-term highly risky transactions. This is in complete contrast to the more forward-looking incentive plans of asset managers whose aim is to reward longer-term profitability. It is right that remuneration plans should be regulated but this type of prescriptive approach misses the point.”

Full response

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