Shedding Light on Non-Financial Risks – a European Survey

Shedding Light on Non-Financial Risks – a European Survey — January 2012

Executive Summary

transparency. A very strong majority of respondents (79%) agree that fiduciary duties of asset managers should be reinforced, by stating that they must invest for the sole benefit of their clients. Ratings of non-financial risks in the KID, as proposed in Amenc and Sender (2010b), would be still a good way to improve transparency for 53% of respondents. The Industry Wishes for Stronger Responsibilities for Asset Managers and Clearer Responsibility for Depositaries According to respondents, the second priority for regulators should be that responsibilities of the fund management industry be put under the limelight and reinforced. Directives must ensure that responsibilities are adequately distributed (and made clear to the client, who must in turn be knowledgeable about risks as well). So there seems to be an agreement

very strong message that the respondents are sending out to regulators: they believe in transparency. Some 61% of respondents rank transparency, information and governance as their top priority for new regulation, while 40% picked the financial responsibility of the industry as their second choice. Regulation on both restitution and distribution come out with similar results, in the third and fourth positions. Giving more judicial powers to investors seems to come out much lower on the agenda of our respondents. An important priority for regulation would thus be to improve transparency, to the extent that respondents on the whole and institutional investors are ready to pay the price for this improved transparency (more than for other types of measure). An overwhelming majority of respondents (91%) agree that regulators should ensure that the information is indeed fair, clear and not misleading. Governance comes immediately behind

Figure 4: How much do you agree with the following assertions regarding regulations on capital protection and financial responsability for non-finnacial risks?

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An EDHEC-Risk Institute Publication