Asian regulatory framework for asset management getting tougher, KPMG warns

Asia will remain a key growth market for asset managers, despite the diverse and toughening legislative, regulatory and taxation requirements across the region, warned a report published today by KPMG.

According to the report, the evolving regulatory framework for asset managers in a number of Asian countries, particularly with regard to consumer protection and fair dealing, is as tough as in Europe and the US.

“Asia, along with Latin America, is unquestionably the hotspot for growth. However asset managers would be unwise to expect lighter touch regulation in the region,” said Tom Brown, European head of investment management at KPMG.

He added that the fast pace of change in product distribution, disclosure and investor protection witnessed in Europe and the US has moved to Asia with enhancements to investor protection and product disclosure a definite priority for a number of regulators across the region.

“While the change varies between jurisdictions, the direction of travel is crystal clear,” he said

KPMG’s report identified the main challenges facing the industry as increased reporting and accountability to improve transparency; consumer conduct to increase investor protection and industry trust and additional risk management requirements.

“There is a broad focus on investor protection, improved transparency and ‘best practice’ with reviews of existing regimes already underway. These include the Financial Advisory Industry Review (FAIR) in Singapore; the Future of Financial Advice (FOFA) in Australia and additional disclosure requirements in Japan,” Brown said.

According to him, managers will have to deal with the plethora of regulation on a practical level, while still paying attention to their growth agendas.

However, changes will offer opportunities for new business models, fee structures and product lines and for consolidation and regrouping resulting in more stable and diversified review streams for many firms.

“The bottom line is smart managers will be able to find opportunities in this ‘new world’ and many of these will be in Asia,” he said.

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