The regulatory pendulum

04 April 2013

Standard Life Investments, the global investment manager, highlights that since the financial crisis, a common response has been to call for more regulation of financial services. While this is welcome, unintended consequences and a lack of co-ordination mean that investors need to be aware of possible adverse ramifications.

In the latest edition of Global Outlook, the leading investment house reviews the key drivers of regulatory change and assesses the likely implications for investors. The report considers which changing business models will be successful and which will not and shows that the current situation also offers opportunities for financial firms to demonstrate that they have a role to play in seeking meaningful solutions to the current economic challenges.

Mike Everett, Governance & Stewardship Director, Standard Life Investments said:

Mike Everett

"The financial services sector depends on the trust of clients for it to continue to be successful in the future. We believe that actions that increase the interaction between owners, managers and investee companies are welcome. We will be engaging with relevant entities to give our views and suggestions in relation to both audit and corporate governance reform.

"It is important however to be aware on the impact of unintended consequences arising from legislative change. For example requiring much higher levels of bank capital runs counter to the call for banks to lend more to hard-pressed consumers and businesses.

"We will continue to keep our clients informed of the significant impacts for them as the changes become more certain. Some of our clients may also wish to play a role in the consultation processes as legislation develops further."