Funds 'part of the solution' to crisis

Tough EU plans to regulate private wealth management companies have been met with a hostile response from the investment industry.

Robert Jenkins, chairman of the Investment Management Association (IMA), suggested that the European politicians who drafted the proposals show little understanding of the financial crisis.

A raft of tough measures are currently on the table at the EU, which if adopted would tighten regulatory controls on the way in which fund managers can operate.

Authorisation, reporting rules and risk management standards among funds are all covered by the plans.

However, Mr Jenkins suggested that banks, rather than funds, bore more responsibility for the credit crunch and economic downturn.

He added: ’Perhaps the problem [with the EU proposals] is not one of malice but rather one of mistaken identity. In this case may I politely point out that investment management is not investment banking.

’When the banks ran out of liquidity, our customers for whom we act as agents, helped supply it. When the banks ran out of capital, the funds we manage contributed to the take up of new debt and equity issues … the investment management industry is not part of the problem but we are part of the solution.’ ADNFCR-2318-ID-19255735-ADNFCR