Lansons Conversations

With no Directive home

Poul Rasmussen’s apparently curt response to the FSA’s research into the cost of the EU’s AIFM Directive is the latest indication that this battle is heating up. The last two weeks have seen a sharp increase in the column inches dedicated to the battle against the Directive and perhaps this latest missive, research carried out for the FSA by Charles River Associates, has struck somewhere a little too close to home for some.

But despite this, the excellent work being done by AIMA, and the various “Ditch the Directive” campaigns, I can’t help feel a slight twinge of concern – barely perceptible but still there nonetheless – that the argument might no longer be moving in the right direction. It’s not going in the wrong direction either, not yet. But neither is it going anywhere fast.

Arguments against the AIFM Directive are much more effective when they are focused on the negative impact it poses to investors and their beneficiaries (i.e., people like you and me) and much less so when it’s talking about elements of national interest or financial impact on the underlying asset managers. By and large, perceptions of alternative asset managers as wealthy and occasionally dislocated from the mundanity of everyday life persist (rightly or wrongly), and aren’t going to be resolved anytime soon. Therefore the plight of these businesses is unlikely to generate sympathy from either the general populace or from traditional European left-wingers such as Rasmussen. Much more salient is the impact the AIFM Directive has on ordinary people, such as pension beneficiaries. The AIC’s response to the Directive – making it clear that it would negatively impact Investment Trusts in which very many ordinary people have substantial savings – was much more aligned with this approach. Similarly, earlier in their campaign, AIMA had calculated the likely cost to pension funds.

The national interest angle is equally risky. As someone who is a direct beneficiary of the UK’s formidable financial services industry I am in no hurry to diminish the power and influence of the City of London. But in my view, playing the national card in an entity such as the EU is prone to backfire. Keeping the arguments at a pan-EU level, highlighting the long-term damage that the AIFM Directive will wreak across Europe should be the favoured approach. Much of the “save our City” type stuff is really a domestic rallying cry, but it’s important to strike the right balance.

It’s also worth remembering that whilst the UK business media is generally opposed to the Directive, that isn’t the case across all of Europe. There are plenty of commentators in France and elsewherewho are more than happy to praise the Directive’s aims.

The real challenge for the anti-Directive lobby is going to be sustaining the media coverage. With this first real hint of acrimony, the media’s appetite is likely to increase. The key here is to stay focused, and not get drawn off course by all those groups and organisations looking to piggyback off the debate for their own benefit. And as the last couple of weeks have shown, there are plenty of those around.