GLOBAL - UK Fund managers must form a united front and lobby government for the reform of tax rules that hinder industry consolidation, PricewaterhouseCoopers says.
The accounting giant’s latest survey found that fund managers expect the number of firms competing globally to shrink by a third over the next three years as the industry consolidates.
But PwC warned that consolidation was hindered by current tax rules.
Global investment management leader Simon Jeffreys said: “Consolidation across investment products, service providers and manufacturers is expected and much sought after, but is hampered significantly by regulatory and tax barriers across borders and due to excessive cost implications in home territories.”
Jeffreys said the fund management industry must be united when confronting governments to overcome these barriers.
He said: “Industry lobbying outside the US, has not been as effective for investment managers as it has for the banking industry, for example.
“The investment management industry needs a stronger, co-ordinated voice linking up across regions to influence governments and regulators.”
But Jeffreys added that although there was a definite trend towards consolidation, the UK market would be a low priority for many European firms looking for acquisitions.
PwC found that of the 23 continental European managers it interviewed, only 22% listed the UK as one of their top three areas in which they wanted to expand.
He added: “The UK perceives itself as a major market that is well-regulated with many large institutional investors and the most open distribution network in Europe.
“And yet, despite proximity, continental European investment managers are unconvinced and are more likely to cross the Atlantic to pursue the US market than cross the Channel to pursue the UK market.”
PwC said more than half of the respondents to its survey believed that the number of firms in the sector would shrink by 30% over the next three years.
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