Oliver Lodge comments stir up European regulators

Comments made by Oliver Lodge and quoted in FTfm today have broken the taboo which has led to the fiction that UCITS funds are equally secure, regardless of which European country they come from. Lodge was quoted as saying that regulators in Dublin and Luxembourg were more interested in promoting their financial services industries than in protecting consumers. The origin of this is the near 100% export of the financial services that are domiciled in those countries.

The comments were made in the context of the wider review of UCITS that is taking place, which is expected to lead to some tightening of the scope. Abuses of the current scope which have been permitted by ‘export-led’ regulators are resulting in a backlash by other EU nations less heavily involved in financial services, but more concerned about the protection of consumers. In many respects the UK stands in between these two extremes, having a large financial services sector and a large population of consumers to protect. But the UK also has a tough regulator which takes supervision and enforcement, as well regulatory standards, seriously. In the context of UCITS it is not the standards that are at fault; the problem lies, in Lodge’s view, with regulators who have little incentive to uphold them.