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FSA slams CEBS over CRD timetable

Friday 24 September 2010 - by Andrew Hickley

The UK FSA has slammed the EU banking supervisory authority over the timeframe given to implement the Capital Requirements Directive, saying that it is “astonishing” that guidelines are still being developed.

Speaking yesterday at the Alternative Investment Managers Association annual conference, FSA sector leader for asset management Dan Waters (pictured) said that the rush to meet the Committee of European Banking Supervisors' deadline was causing unnecessary inconvenience to the industry.

“The time pressure we are under to implement the Capital Requirements Directive by 1 January next year - less than six months after its finalisation - is significant and is creating challenges for all stakeholders involved. In a world with saner timetables, we would have had time for pre-consultation with all affected industry sectors.

“It is quite astonishing, for example, that the guidelines that will be produced by the Committee of European Banking Supervisors to support the national implementation of the CRD, are still being developed and will only be consulted on over the next couple of months.”

Waters said that he understood concerns from the asset management community that they had been pushed to one side over the FSA's remuneration code consultations (the vehicle through which the FSA will implement CRD) but encouraged further engagement from the industry.


“In this far from perfect process, I am conscious that the asset management industry feels rather like Cinderella in the CRD story. For reasons we understand, the focus has been on the banks primarily and I think it fair to say that we need to engage more intensively with the asset management industry through the consultation period.

“We are in the process of doing this and are arranging consultative ‘town hall’ meetings over the coming weeks as we did in the case of the AIFMD.”

The consultation period for responses closes on 8 October.

Waters also used the opportunity to defend the inclusion of asset managers under the directive, which has occurred due to amendments in the Markets in Financial Instruments Directive. He said that just because they hadn’t caused the financial crisis, it does not mean they don’t generate systemic risk.

“It seems to us that in general, in the case of asset management, the potential for systemic disruption arises not from the failure of a fund manager itself but from the potential impact of a fund or group of funds that could have a systemic presence in the markets, or perhaps in a vulnerable subsector of the market.

“Hedge funds are the most obvious example. While neither our nor any other credible analysis of the financial crisis suggests that hedge funds caused it, we recognise and have said it might be possible for a hedge fund or a group of them to become systemic or to have a disruptive effect in markets.”


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