Policy Chairman Catherine McGuinness - Investment Association Speech
Investment Association speech
Thursday 22nd June
Catherine McGuinness, Policy Chairman
Good evening, everyone, and thank you for your welcome.
I am Catherine McGuinness, the Chairman of the Policy & Resources Committee of the City of London Corporation, the elected authority that oversees the running of the Square Mile.
The Square Mile is London’s historic heart – the seed from which the wider City grew – and it is particularly known as the traditional financial and business district. Where business clustered and financial services began.
From trade in bread and milk on the streets that still bear the names of the goods traded there – think Bread Street, where Aberdeen Asset Management has its London base - to Lloyds of London, originally a coffee house and now the home of the biggest insurance market in the world.
So we have gone from humble and simple beginnings to being the world leader in financial services.
As a result the City Corporation has a wide brief that transcends a conventional local authority and today has three main aims:
- to support and promote London as the world's leading international financial and business centre and attract new business to the capital and the UK
- to work in partnership with the rest of London to increase skills, employment and opportunities for all Londoners, including through our grant giving charity the City Bridge Trust
- to enhance the capital as a hub of culture, history and green spaces for Londoners – residents, workers, and visitors.
To give a sense of the breadth of our work, this week we hosted a Mansion House event on Tuesday, when we heard keynote speeches from the Chancellor of the Exchequer and Governor of the Bank of England.
I’ve been at a meeting with our cultural and heritage institutions – the Barbican Arts Centre, the Guildhall School of Music & Drama, the Museum of London, our open spaces – to discuss major regeneration plans for the north west of the City to enhance on the ground our rich cultural offer.
And I have been working with other local authorities across London to respond to the terrible fire at Grenfell Tower.
Our chief executive is leading the London resilience response, we have several members of staff over there supporting, and we have just agreed to purchase properties within the borough of Kensington and Chelsea for families who have lost their homes.
So, it is for me a real pleasure to be with you here this evening to celebrate the importance of the asset management industry, not just to the UK but also to global markets.
The asset and wealth management industry has grown to be one of the great success stories of the financial services sector in recent times.
You and your businesses oversee the savings and pensions of millions of businesses and people, making decisions for them that will affect their financial well-being and impact on their daily lives.
You influence the real economy, by investing clients’ money in a wide variety of enterprises, and supporting businesses which provide jobs and drive economic growth.
And you are in a unique position to shape economies for the better, by investing responsibly and sustainably, and compatibly with the values of the savers whose money you manage.
The UK hosts one of the largest markets in the world for fund management. It is the leading global location for management of funds on behalf of foreign clients.
We are fortunate in having many advantages.
A strong and responsive regulatory environment that is effective, fair, and focused on the future.
Our cluster and depth of liquidity as a leading global centre for financial services, supplemented by our time zone, language and rule of law.
Funds that are domiciled in the UK can take advantage of some 120 double taxation duties, more than in any other country.
A strategic geographic location, on the doorstep of Europe and with strong links to the Middle East, Asia and beyond.
State of the art support services in front, middle and back ofﬁce across UK regional centres, allowing cost efﬁciencies.
An ecosystem which promotes innovation and product development, for example Islamic Finance and renminbi trading.
And, a deep talent pool that supports all aspects of the asset management value chain.
The UK’s financial and professional services industry provides a gateway to capital for the benefit of customers and clients in the UK, the EU and the rest of the world: through infrastructure-funded, pensions-invested, products-invented, and startups-supported.
But we must acknowledge that we face uncertain times. Brexit raises questions over how we do business in the future.
The decisions taken in the Brexit negotiations will determine our relationship with the EU for generations.
As yours is an industry that transcends borders, that benefits ordinary people and businesses across the EU, it is crucial that we achieve a solution which is a “win win”; which works for EU27 and for the UK.
The City has been clear in what it has asked of the UK Government since the referendum result last year.
First, early agreement on a sensible transitional period. Whatever the ultimate agreement, extracting the UK from the EU will be complex, and will involve repapering millions of contracts.
We need, as our Chancellor has said, a slope not a cliff edge.
Secondly, a bespoke agreement for the longer term, providing reciprocal two-way market access with the EU, based on mutual recognition of regulation.
And thirdly, clarity on people, with businesses able to recruit and move the employees they need.
And for asset management, I believe that ensuring EU delegation rights can be relied on by UK managers is paramount in protecting investors and making sure they are not put at risk.
Investors need access to the best portfolio management expertise, wherever it resides. London is rich in that expertise.
Delegation ensures that investment managers can centralise resources to maximise investor benefits – lower risk, greater diversification, more choice and lower transaction costs.
And delegation to a jurisdiction like the UK, where regulatory standards are robust - and at least equivalent to those in the EU - ensures sound prudential management and financial stability.
Let’s preserve this ‘gold-standard’ for the benefit of savers and investors, corporates and the European economy.
But we must not limit our horizons to the next few years or just to dealing with Brexit. We all need to look to the future and the exciting opportunities that are arising around the globe.
London has a history of leading the direction of global financial services, both nationally and internationally. That will continue. London has a strong future in traditional as well as alternative financial services.
The City is a centre of excellence for a wide range of audiences and target clients, products & legal structures – institutional, retail, UCITS, hedge and alternative funds.
London remains a leader in innovation, whether FinTech, Blockchain, or new products and services.
Two good current examples are Green Finance and Cyber.
The City of London’s Green Finance Initiative is now 18 months old.
Developed in partnership with industry and government, the Initiative has been tasked with promoting and developing the UK’s green finance sector.
In recent months, the Green Finance Initiative has agreed a ‘formal partnership’ with its peer organisation in China, the Green Finance Committee, and has participated in events and dialogues with China, Brazil, Germany and Italy.
The initiative aims to provide public and market leadership on green finance; advocate for specific regulatory and policy proposals that might enhance the green finance sector worldwide; and promote London and the UK as a leading global centre for the provision of green financial and professional services.
The asset management industry has a key role to play in this, and indeed I am delighted that the Investment Association has already participated in some of the GFI meetings, as you formulate your own activity on sustainable investment. I hope that we can continue to work together on this important agenda.
The UK government has doubled investment to protect the UK from cyber-attacks.
This investment includes the new National Cyber Security Centre (NCSC), stronger regulation of cyber resilience for critical infrastructure, and the development of key cyber skills for the economy.
London is home to Europe’s only dedicated cyber security accelerator programme – CyLon. London is also home to Level39 - Europe’s largest technology accelerator space for finance, cyber-security, retail and smart-city technology companies. The City Corporation will play its part in making London the most cyber secure place to do business in the world.
We are committed to supporting the success of the asset management sector, and to working with Chris and his team to promote the UK based industry around the world.
Asset management is a crucial key to unlocking future global growth, modernising infrastructure, protecting people from poverty and ensuring better standards of living in retirement.
I hope your AGM will be a great success, that visitors enjoy their stay in London and take advantage of the culture we have to offer here… I would recommend visiting Tower Bridge and looking through the glass floor!
And that any of you considering a location for a new HQ will base yourselves here. And if you choose the Square Mile, we in the City Corporation will be happy to help.