December 12, 2014

Higher costs on the horizon as tax and regulatory change continues to bite, according to new BNY Mellon poll

LONDON, Dec. 12, 2014 /PRNewswire/ -- Asset managers, pension funds, banks and insurers expect to be spending more on tax and regulatory-related change in 2015 and for some years beyond, according to a new poll by BNY Mellon, a global leader in investment management and investment services.

The poll, conducted at BNY Mellon's recent third annual Tax and Regulatory Forum in London, found that 71% of the almost 250 delegates attending the event expected to see higher costs in the coming year compared to 2014. 

While at the start of the event only 41% felt tax and regulatory-related costs would increase in 2015 – and 5% expected to see spending decline – by the conclusion of the day's programme, which explored some 20 tax and regulatory changes, the consensus among delegates had shifted significantly.

Key findings of the poll included:

  • UCITS V will be a key focus for providers and clients alike in 2015. Forty three per cent of delegates believe the cost of compliance will be higher than for the Alternative Investment Fund Managers Directive (AIFMD), with 29% saying it would be about the same or less. 
  • As was the case with AIFMD, delegates were concerned about the proposed timing of upcoming regulatory changes and the potential for another bottleneck around compliance and approvals to materialise in Q1 2016. 
  • At this stage 65% of delegates polled were undecided as to when they will implement the necessary changes mandated by UCITS V.
  • Questioned as to when they expect to see the current wave of regulatory change to materially recede, 38% of delegates said 2017, while 54% said never.
  • When asked about outcomes for investors, responses echoed findings from previous BNY Mellon surveys. 51% of delegates expected investors will see higher costs and less choice – but also better protection. 
  • There was marked optimism – 82% of delegates – in that firms also see some opportunities arising from the current changes, with half of those respondents saying these opportunities would be material to their own business. 
  • Asked to identify those opportunities, 38% said cost savings, while 24% cited new markets and new asset classes. Only 15% identified new product developments.

Paul North, head of product, Europe, Middle East and Asia at BNY Mellon, said: "There seems to be a consensus that the next two years will be the most demanding in terms of tax and regulatory work and costs. Despite this, we also note the continued optimism among asset managers when they consider their longer term prospects around, and ongoing interest in, reducing costs and maintaining the pace of product development."    

"The global trend towards tax transparency is at the heart of regulatory reform," said Mariano Giralt, head of EMEA tax services at BNY Mellon. "The challenge for financial institutions is to keep pace with a host of new initiatives which include FATCA, the OECD's Common Reporting Standard and potentially a Financial Transaction Tax which would cover 11 EU countries. These initiatives are adding significant compliance costs for financial institutions."

Notes to editors:

BNY Mellon's Asset Servicing business supports institutional investors in today's fast-evolving markets, safekeeping assets and enhancing the management and administration of client investments through services that process, monitor and measure data from around the world. We leverage our global footprint and local expertise to deliver insight and solutions across every stage of the investment lifecycle.

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of Sept. 30, 2014, BNY Mellon had $28.3 trillion in assets under custody and/or administration, and $1.6 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on or follow us on Twitter @BNYMellon.

This press release is issued by The Bank of New York Mellon to members of the financial press and media.

All information and figures source BNY Mellon unless otherwise stated as at September 30, 2014.

The Bank of New York Mellon, London Branch, registered in England and Wales with FC005522 and BR000818.

Branch office: One Canada Square, London E14 5AL. The Bank of New York Mellon is supervised and regulated by the New York State Department of Financial Services and the Federal Reserve and authorised by the Prudential Regulation Authority.

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Tim Steele 
+44 20 7163 5850