The future of the investment management and real estate sector is being increasingly shaped by a wave of new regulation in areas ranging from governance to financial reporting.
The advent of Sarbanes-Oxley calls for a more systematic approach to reporting and control structures. The move to International Financial Reporting Standards (IFRS) in the EU, Australia, Hong Kong and a number of other leading markets offers more comparable reporting, though in the short term there could be heightened uncertainty over valuation and application. The Capital Requirement Directive will apply Basel II to investment management businesses in the EU.
These regulatory developments present enormous challenges in areas ranging from organisational embedding to investor relations. Wide jurisdictional anomalies, especially between the EU and US, could lead to administrative headaches and a potentially uneven playing field. In the right hands, however, they could provide an opportunity to improve governance, accountability and risk management.
While equally onerous, the reform of sales practices could prove to be an opportunity to improve the reputation of investment management and real estate businesses and sharpen competitive differentiation. Moreover, the relaxation of cross-border controls could open up new markets and enable companies to improve economies of scale.
PricewaterhouseCoopers can help investment management and real estate businesses to develop an effective and cost-efficient approach to compliance that maximises the synergies between different regulations. They can also help organisations to turn compliance into an opportunity to improve management processes and strengthen confidence in the business.
