Lobbyist for Europe’s €17.6tn fund industry believes in Brexit balancing act

Having a big personality tends to lend itself to being a chief executive. But Tanguy van de Werve, who runs Europe’s main investment management lobby group, says the opposite is true in his case.

The unassuming Belgian says his lack of ego has stood him in good stead since he took over as director-general of the European Fund and Asset Management Association two years ago.

A native of Brussels, Mr van de Werve points to his ability to mediate between competing national interests, as well as his lack of allegiance to a particular financial centre as very useful in his job. “The fact I’m not biased in favour of the French, the British or the Germans has helped me tremendously,” he says.

As a grouping of national asset management trade bodies, Efama has long had to navigate competing interests among its members. But Mr van de Werve took over at a time when Brexit had exposed new divisions.

Although Mr van de Werve declines to comment, observers say that several national trade bodies pushed for the UK’s Investment Association to be excluded from Efama after Brexit.

While Efama has historically had non-EU members, such as the Turkish and Swiss fund associations, the rebels argued that the organisation should no longer involve the UK, given the country’s intention to diverge from EU rules after Brexit.

The dispute reached its conclusion in October when Efama members agreed to change the association’s governance, reducing the influence of members from non-EU countries. Although the IA still as a seat on Efama’s management board, the association has established a new advisory committee that has only EU member states.

Mr van de Werve plays down the changes, saying they will not alter the balance of power at Efama. But the furore exemplifies the thorny questions Brexit has raised for the association.

As the UK’s transition period draws to a close, some EU fund industry figures are nervous of what the competitive landscape will look like after Brexit.

That has led countries such as France to push for restrictions on UK financial groups’ access to the EU. However, markets including Ireland and Luxembourg, which source much of their fund back-office business from the UK, are keen to preserve close ties with London.

Mr van de Werve, who has worked in Brussels for most of his career and handled EU lobbying for London-based banking trade body Afme before joining Efama, is saddened by the UK’s departure.

“It is a huge step backwards,” he says. “We are stronger together than apart. I hope the UK and EU will stay close to one another.”

At the same time, he is pragmatic on the need to protect EU fund industry interests after Brexit. “We don’t know what 2021 and beyond will bring in terms of regulatory divergence,” he warns. “If all of a sudden there is an initiative that endangers the status of Ucits [the EU’s retail fund regime], we would bring that issue to the [Efama EU advisory] committee.”

But he argues that this is not incompatible with maintaining good relations with Britain. “Wanting to strengthen the EU market does not mean we want to undermine the UK,” he says. “We want to avoid Fortress Europe.”

One area where Efama’s members are broadly agreed is protecting the “delegation rights” that allow fund managers to domicile a fund in the EU while outsourcing investment decisions to managers in financial centres such as London, Hong Kong or Boston.

The EU is currently considering whether the delegation framework needs to be strengthened post-Brexit to safeguard European investors. While this would mainly hit the UK — about £2tn of the £8.5tn managed by British fund groups is run on a delegated basis for EU investors — the practice is widespread in the European industry.

“We fail to understand the need to question the delegation model,” says Mr van de Werve. “[The EU’s consultation] has created uncertainty and unease among our members. The [proposals] go well beyond mere clarifications [and] may give rise to unintended consequences.”

Fund industry figures say that Mr van de Werve is implementing much-needed change at Efama, moving it away from its image as a staid organisation immersed in the technicalities of fund regulation and focusing it on the bigger picture. “He understands very well how lobbying is done and how the asset management industry must be represented,” says one senior executive.

Mr van de Werve has built relationships with Brussels policymakers over almost two decades working for European trade bodies. He started his lobbying career at the European Banking Federation, later taking the helm at two trade bodies representing the leasing and consumer credit industries.

But it was at Afme that he realised the value of advocacy and having a strong public voice on key issues, he says — an approach he wants to import to Efama. “At the moment, debates on capital markets issues are dominated by the sellside,” he says. “We as the buyside need to do more. There is so much [regulatory attention] coming our way.”

He wants to invest in Efama’s data and research capabilities to help decision-making, emulating the approach of counterparts such as the US-based Investment Company Institute.

One debate where Mr van de Werve is eager for Efama to make its voice heard is financial stability. Concerns that asset management can propagate market shocks through liquidity mismatches were revived by the pandemic-induced sell-off earlier this year.

Although only a small number of funds were forced to suspend in March, regulators are concerned that the crisis might have escalated seriously had central banks not intervened.

But Mr van de Werve believes these assessments are short-sighted and dismisses calls for new rules. “We keep reading that central banks’ intervention played an instrumental role. But we observed that most funds entered the crisis with very strong liquidity positions.”

He also voices scepticism over quick-fire rulemaking in response to financial scandals such as the failure of Neil Woodford’s fund, noting that policymakers should focus instead on the enforcement of existing rules.

Given Efama advocates for the fund industry in Europe, what does Mr van de Werve think of the meteoric growth of US giants BlackRock and Vanguard, which now also dominate the European market? “Good for them,” he laughs. “We represent them as much as other managers.”

However, he says action is needed to improve the competitiveness of European groups. Just two European companies — Allianz’s asset management businesses and Amundi — rank among the world’s 10 biggest fund groups today, compared with four in 2009, according to Willis Towers Watson. “We need to create the conditions to allow large European asset managers to emerge.”