BT Investment Management (BTIM) chief executive Emilio Gonzalez said the financial services industry would face greater regulation over the coming years due to the fallout from the credit boom.
“We have yet to face the full force of regulation and the next two years will be dominated by increased regulation,” Gonzalez told delegates at Morningstar’s 2010 Investment Conference yesterday.
“We’ve seen from the Bowen [Minister for Superannuation Chris Bowen] announcement that the government is not taking a step backwards, and if the Bowen proposed changes are any indication, we are in for further significant announcements.
“The Henry review is, I think, primed for some material announcements on the tax front that will challenge everyone’s thinking.”
The fallout from boom periods such as the tech bubble and credit boom unfortunately leads to an ever-increasing regime of regulation, he said.
But Gonzalez said BTIM supported measures that promote acting in the best of interests of investors, raise transparency and raise the professional standards of the financial services industry.
“Those organisations that can demonstrate a clear value proposition to their clients are most likely to benefit from the recent changes announced by Chris Bowen,” Gonzalez said.
“The potential stripping of volume-based payments between advisers, licensees, platform and product providers will both create transparency and reduce the conflicts of interest, but it will also come with some pain during the adjustment phase.
“New business models will be created and that is perfectly fine provided the principles around client interests, transparency and professional standards are not compromised.”
BTIM will conduct a review on all its existing relationships and comply with all of the reforms by the application date in July 2012, he said.
“Even with the recent Chris Bowen announcements, uncertainty remains given we are in an election year and the amount of legislation that still needs to be written and the possible unintended consequences,” Gonzalez said.
