UK - Walker argues against Commission Directive

Walker repeated his assertions that the private equity industry does not pose any wide-scale systemic risk and that therefore there is no compelling case for additional regulation, particularly as the UK is already regulated tightly by the FSA. He added that the Directive will in effect make the EU less attractive to the private equity industry, driving business out of Europe.

He went on to outline several areas of the proposed Directive that he felt would specifically be detremental to the private equity industry. He particularly highlighted the additional capital requirements, the public disclosure of information regarding portfolio companies and the new rules relating to third country funds. This latter in particular, he suggested, would drive large international firms to leave the EU.

Director of investment affairs at the Association of British Insurers, Peter Montagnon, pointed out similar faults with the Directive, was also quick to indicate the parts of the proposals with which he agreed. He concured with Walker on the problems surrounding the third country rules, but he did express support for the passporting motive of the directive, saying that it was pivotal in creating an EU-level market.

Montagnon's main concern was the limited choice professional investors would have and the compliance requirements that would massively increase costs. Like Walker, he concluded that private equity does not involve systemic risk and therefore regulation requirements should be tailored, rather than being part of a "one size fits all" directive.

He did, however, voice his sympathy for the need for professional investor protection and for authorities to have a proper handle on the market. This appeared to strike a chord with the commitee and such cooperative sentiment could be important to gaining its support to making satisfactory amendments to the directive.

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