Ethics and governance in the European Financial centers

Peter De Proft, Director General of EFAMA, comments on the EU Commission’s launch of a public consultation on the UCITS Depositary Function:

“EFAMA very much welcomes the Commission’s consultation because we think it is absolutely necessary that investors have faith in the UCITS regulatory framework, and as the leading representative of the asset management industry in Europe, we are very happy to be consulted and to express our views in order to keep investors’ confidence in the UCITS’ brand.

We think that it is important that we have the opportunity to express EFAMA’s views of how European policy towards UCITS depositaries should best evolve.”

I sent the following e-mail :

Dear Mr de Proft

Further to the EFAMA press release dated 3 July where you state that “EFAMA very much welcomes the Commission’s consultation because we think it is absolutely necessary that investors have faith in the UCITS regulatory framework, and as the leading representative of the asset management industry in Europe, we are very happy to be consulted and to express our views in order to keep investors’ confidence in the UCITS’ brand. We think that it is important that we have the opportunity to express EFAMA’s views of how European policy towards UCITS depositaries should best evolve.”, I would like, as a rigorous stakeholder, to stare my views with you.

I agree without any reserve to state that it is absolutely necessary that investors have faith in the UCITS regulatory framework and that it is critical to keep investors’ confidence in the UCITS’ brand.

But I am quite surprised by the way the ALFI and the EFAMA are handling the Madoff issue.

When discrepancies are clear enough, it is better to make amend and take initiative to build or rebuild trust than denying and/or hushing up the issue: a jurisdiction should not communicate on its fully compliant legal and regulatory framework and on the faithful transposition, when a basic analysis to compare the directive and the law and related regulations demonstrates that critical provisions explicitly stated in the UCITS directive were clearly dropped in transposition all the more than these missing provisions definitely opened the drift.

As I wrote, The base of funds is confidence, and the base of confidence is the truth.

Please find attached the current draft of my analysis of the Commission’s working paper on the UCITS depositary function, where I demonstrate to what extend an inaccurate transposition of the directive in Luxembourg opened the drift.

The expression "fully compliant" or "faithfull" to qualify the Luxembourg legal and regulatory framework vis-à-vis the UCITS directive are definitely not acceptable.

I am looking forward to hearing from you soon.

Best regards

Jérôme Turquey
Consultant in Business Ethics and Reputational Risk
http://ethiquedesplaces.blogspirit.com

Analysis attached