Protecting investors

Investor protection remains high on the regulatory agenda, with some regulators reprioritizing their resources to double down on this important topic.

In this year’s edition of KPMG International’s Evolving Asset Management Regulation report, KPMG professionals draw insights from regulators’ efforts to balance the growth agenda with investor protection.

Alongside the drive for growth and competitiveness, regulators continue to sharpen their focus on investor protection with new conduct frameworks as well as updated accountability-related requirements and disclosure rules. While some regulators are exploring changes to how customers may receive advice, protecting vulnerable customers remains a key priority.

“Regulators remain mindful of maintaining sufficient focus on their core objectives, particularly the protection of retail investors, and the orderly and clean functioning of markets,” says Jim Suglia, KPMG International’s Global Head of Asset Management.”

Around the world, the development, implementation and embedding of conduct frameworks continues, albeit tempered by the need to find the right balance with the new competitiveness agenda.

While some new investor protection frameworks are being introduced, much of the emphasis is on refining or embedding existing measures. For asset managers, this presents challenges around where guardrails should be drawn in terms of potentially loosening their internal risk appetite and controls.

Alongside conduct, several jurisdictions continue to consider the appropriate calibration of accountability requirements and wider rules to ensure robust governance and controls. Some are currently establishing new accountability regimes while others are focused on enhancing the effectiveness of their existing rules while improving international competitiveness.

KPMG’s global network of asset management professionals has noted that many firms are now in the process of refining their frameworks and reviewing their compliance processes to ensure those accountable are enabled to discharge their duties.

Beyond accountability, there are broader initiatives to strengthen governance, culture and controls.

Examples include the introduction of new licensing and supervisory frameworks, fund-level controls being reviewed, new rules on non-financial misconduct taking effect, and to corporate-level control environments. 

At the same time, regulators continue to consider how to achieve the optimal level of disclosure for investors without adding excessive new compliance burdens on firms. This has resulted in efforts to simplify and modernize the information provided to investors in some jurisdictions.

In some cases, regulators are revamping retail investment disclosures as part of efforts to modernize their existing frameworks or to increase transparency. Others are streamlining the information fund managers need to publish in their prospectus or annual value assessments.