Shedding Light on Non-Financial Risks – a European Survey

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

Executive Summary

only 37% agree that those class action suits should allow for penalties on top of the fair compensation (36% disagree). This echoes the criticism of class actions that it forces deep pockets into settlements of baseless claims, and the proposal in Amenc and Sender (2010b) that they are only used to obtain reparation of losses, not as punishment — financial penalties above and beyond reparation for damages — usually associated with class actions: the idea is to ensure reparations are made, not to punish. Those class actions would have to be defined within a European framework to be consistent across countries. A significant 52% of respondents agree that because of diverging national laws, class action suits in Europe only make sense if they are brought to a pan-European authority or court (19% disagree). As for other ways to refer matters to supervisors, a majority of respondents (52%) agree that a European ombudsman/ mediator should be created (20% disagree) to settle cross-border cases. The European

respondents (69%) agree that depositaries should be responsible for the unconditional restitution of assets under their custody or control. Likewise, 68% agree that the restitutiononassets shouldbe contractually defined between depositaries and asset managers at the creation of the fund. And many think that sub-custodians should be included in this contractual definition of the roles: 65% agree that the restitution on assets should be contractually defined between depositaries, sub-custodians and asset managers. Opinions are Divided on the Judicial Powers of Investors On the last theme – the judicial powers given to investors – opinions are split. We investigate the themes of class actions, divergence of national laws, and role of an international savings authority or financial ombudsman. Overall, a majority of respondents (70%) agree that investors should be able to launch class action suits to get fair compensation (16% disagree). However,

Figure 7: How much do you agree with the following regulations on the judicial power of investors regarding non-financial risks?

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An EDHEC-Risk Institute Publication