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IMA has grave concerns over FSA's remuneration code

Tuesday 12 October 2010 - by Andrew Hickley

The Investment Management Association has attacked the FSA’s consultation over changes to its remuneration code, saying that it has “grave concerns” over the implementation timetable of the proposals which it says should not even apply to its industry.

In its response to the FSA’s consultation, the IMA heavily criticises plans to include asset managers with the code as part of changes to the Capital Requirements Directive 3, due to be published at the end of November and take effect from 1 January 2011. As a result of the changes, the current number of 26 organisations that are subject to the remuneration code will be raised to over 2,400 institutions, of which asset managers will be included in.

Being brought into this group will affect the payment and bonuses that the asset management industry can offer. However the IMA argues that the business models of the industry mean remuneration is not linked to balance sheet risk taking, which have been cited as a reason for the changes to the ruling.

“Our interpretation of the amended Capital Requirements Directive is that the majority of principles should not be applied to asset management firms. We also have grave concerns about the implementation timetable,” the statement reads.

“We advocate that the rules should exclude asset management firms from many of the detailed requirements unless the firm is performing activities which are inconsistent with the business model of the majority of asset management firms.”


The statement also warned that the increase of firms subject to CRD3 might create “unintended consequences” for the asset management industry. It also requested that changes to the code are made, with the rules for listed companies being made to apply to those holding different structures.


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