Regulatory challenges can be opportunities
Asset managers facing regulatory and compliance challenges should view the flood of regulation as an opportunity to enhance their company’s operational structure and provide a strategic advantage in a competitive market.
That’s the belief of PWC Bermuda Asset Management leader Scott Watson-Brown.
“The current level of regulatory scrutiny is here to stay,” he said.
“Proactive management of regulatory risk is key to operational success. An ad hoc approach to regulation is not a viable long-term solution.”
The new regulatory and compliance landscape was the focus of the RCA’s Regulation, Operations & Compliance Symposium 2015, which drew more than 200 senior regulators and industry professionals to the Island last week.
The symposium was held at the Fairmont Southampton.
PwC senior strategy & policy advisor Troy Paredes was among former SEC commissioners at the event who discussed regulatory and compliance challenges faced by the asset management industry.
He said that, while grappling with the regulatory framework and demands of the landmark Dodd Frank Financial Reform and Consumer Protection Act, industry participants also face mandated compliance with an evolving governance framework.
This framework covers many other aspects of operations — from provision of advice, securities trading, marketing and financial statements disclosures, and as far reaching as rules governing employees’ personal trading and political contributions.
The symposium attendees heard that regulators are focusing on compliance areas including:
• ‘Tone at the top’
• Governance programmes and fiduciary duties
• Conflicts of interest and disclosures
• Adequacy & competency of in-house compliance functions
• Fee and expense allocations
“The expectations of today’s alternative investment managers have never been higher,” said Mr Watson-Brown, noting that key stakeholders including investors, clients and prospective clients, are demanding greater transparency and assurance over the effectiveness of investment manager internal control frameworks and compliance functions.
Recent high-profile fraud cases and compliance failures have only heightened these concerns and expectations.
An RCA spokesperson said there had been 275 registered attendees at the Bermuda event, and added: “We look forward to another successful Regulation, Operations and Compliance Symposium next year.”
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