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Press releases

Laven Partners Comments on the Abolition of the FSA

Posted on 17 Jun 2010

The Chancellor George Osborne announced yesterday plans to abolish the FSA and move regulatory powers to the Bank of England. The Chancellor said the FSA had become a narrow regulator — and that no one was controlling levels of debt and that when the crunch came no one knew who was in charge.

Comment from Jerome Lussan, CEO of Laven Partners, a consulting firm focused on the alternative investment industry:

“Any development towards better compliance is to be welcomed and this is clearly the ambition of the new government. However, the transfer of powers to the Bank of England must not be just for show and must address the true problem of regulation which historically has been the lack of enforcement. We have over 100 clients in the alternative and long only investment industry who will be concerned by these news.

This change could increase costs for asset managers which may enhance their desire to leave the UK which in turn would be hurtful to our economy and London.

We hope the proposed consultation period is carried out efficiently – what we must avoid is any mess similar to what was caused by the Alternative Investment Fund Managers Directive in Europe.

We should also bear in mind the costs to the taxpayer, particularly in view of the government’s plans to cut costs.

In terms of improving regulation, we hope that the new Consumer Protection and Markets Authority which according to the plans would be in charge of conduct of business issues, will continue to implement and enforce the existing rules which are good, ultimately benefitting investors and regulated firms. We are however concerned about the announced separation of prudential regulation from conduct of business rules – often issues discovered through the course of prudential regulation (such as FSA ARROW visits) lead to further detection of problems in conduct of business practices.

We will be particularly interested to see how the link is expected to work between the two regulators.

All in all, we knew this was a major plan by the Conservatives. Now that the first steps have been taken, it will be interesting to see how the new regulators will tackle the task. Most importantly however, we believe there will need to be continuity within enforcement which was successfully set in motion by the FSA and that any change much be done quickly so as not to leave investors and asset managers in limbo.”

We shall work closely with all our clients in preparing for any anticipated changes. For any further information, please do not hesitate to get in touch.