Compliance bosses for Europe’s largest asset managers are not the only ones struggling under the weight of increased regulation, according to Nicola Smith, chief executive of Helvetic Fund Administration in Gibraltar, who says that smaller funds are being forced to shut-up-shop in light of the costs needed to remain compliant.
A recent survey from Ernst & Young highlighted that compliance chiefs for large asset managers are struggling under an avalanche of rules in order to be compliant with incoming regulations such as AIFMD.
However, Smith (pictured) says that they should count themselves lucky as the cost of compliance is actually putting smaller funds out of business: “The added work that regulation will bring is really unsurprising but despite the concerns from larger funds, they are ultimately better equipped, and more adept, at handling the changes and burdens brought by increased regulation, but what about everybody else? Smaller funds simply don’t have the resources to handle the increased reporting needed and are being forced out of business, as a result of little or no alternatives.
“Fortunately, service providers are recognising the difficulties associated with increased regulation and are working with managers to offer niche services designed to fit smaller funds, that will not break the bank.
"When it is not possible to afford your own compliance officer smaller fund managers could look to their administrator to see if they can provide some of the back office support to reduce the costs and allow the manager to focus on what they are good at.
"Generally the manager should look to find service providers who are looking to help them find solutions rather than just offering an off the shelf product that does not vary with each client’s needs. In larger organisations these services usually come at a very high premium and are only on offer to very large funds but in smaller organisations the emphasis is very much on a tailor made product and a high level of service.
"It is this process that allows the fund manager to pick the service which best suits them, in order to meet regulatory needs without breaking the bank."