Shedding Light on Non-Financial Risks – a European Survey

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

Executive Summary

Breakdown of Survey Respondents The present survey, conducted between 27 June and 18 September 2011, confronts the main conclusions of Amenc and Sender (2010b) to the opinions of the industry and looks at the relevance of the elements we just highlighted, from the point of view of the professionals. Our survey is based on replies from 163 high-level professionals of diverse horizons from the European fund industry. Some of the respondents asked to be contacted for further discussion, and we ran follow-up phone interviews. Those discussions shed light on some of their answers. Table 1 details the geographical split of respondents. France accounts for the largest share, with more than a fifth of the participants. Luxembourg and Ireland account for almost 17%, followed by the United Kingdom, Germany, Austria and the Netherlands. Other European countries still represent more than a third of responses, which testifies to the geographic diversity within our survey. The relative presence of firm types in each country zone is detailed in Table 2.

clients with information that is accurate and not misleading. However, the role of the asset manager, as one cannot expect the distributor to have access to the full set of information as investment processes become more complex. A final message of Amenc and Sender (2010b) regards the judicial powers of investors. The EU legislation is still lacking a legal framework for settling disputes, and those are still handled at a national level. The result is a case-by-case approach, which does not do away with national disparities – bankruptcy laws largely stem from legal origins and may conflict with EU financial regulations and an EU body to ensure that national laws do not conflict could be justified. Supervisory powers differ in their implementations with widely varying maximum fines, together with differing cultures. Furthermore, it is difficult for an investor to have recourse to a foreign mediator (that of the home country of the fund, not of the investor). For this reason, a European Ombudsman could be justified. Lastly, the definition of class actions in EU financial laws could help investors enforce the fiduciary duties of fund managers.

Table 1: Split of respondents by geographic zone (in percent) France Luxembourg, Ireland United Kingdom Germany, Austria, Netherlands

Switzerland Portugal, Italy, Greece, Spain

Nordic countries

Other

22.1

16.6

14.7

11.7

9.8

6.1

4.9

14.1

Table 2: Split of respondents by firm type (in percent) Asset manager Pension fund Reseller Insurance company

AM servicing

Consultant

Other

Regulator/ supervisor

Lobby

41.6

15.5

9.3

8.7

7.5

6.8

6.8

2.5

1.2

7

An EDHEC-Risk Institute Publication