UK asset managers' access to the EU single market must be reviewed regardless of a potential Brexit, as free trade agreements among member states are "incomplete", according to Guy Sears, interim CEO at the Investment Association.
Speaking at this year's Morningstar Investment Conference, Sears (pictured) said access is being limited by bureaucracy and varying local requirements across member states.
"Local laws are currently preventing the easy distribution of products and services across the European Union," he said. "If the referendum means that the UK stays in the EU there is still a need to address passports, as the single market remains incomplete.
"On the one hand, the loss of passports would be damaging. On the other hand, the persistence of passports in their current form would be a sad compromise compared to where we could get in financial services."
Investment Association names TheCityUK's Cummings as new CEO
Many figures from across the UK's asset management industry have expressed concern a UK departure from the EU would prohibit the sale of UK-domiciled funds to European investors.
Under current requirements, funds must be domiciled in an EU member state to qualify for UCITS status, which would automatically be lost in the event of a Brexit.
The UK is currently running 37% of Europe's assets, so if the UK does become a third country, it is undoubtedly the case that it will be approached for equivalence.
Additionally, if the UK were to exit it would become classified as a third country and its rules would have to be deemed equivalent to European legislation by the European Commission and the European Securities & Markets Authority for access to continue.
In light of this, some have questioned whether an independent UK would make different choices to Europe on certain pieces of legislation, losing EU equivalence in the process.
Brexit 'absolute carnage' for smaller UK fund groups as UCITS passport revoked
FTI Consulting's Financial Services Practice went as far as to suggest that negative sentiment aimed at the UK in the wake of a Brexit could cause EU members to decide unfavourably on UK equivalence.
But Sears said the UK would be approached by the EU for equivalent legislation if the UK were to depart, allowing the cross-border distribution of products to continue.
"The UK is currently running 37% of Europe's assets, so if the UK does become a third country, it is undoubtedly the case that it will be approached for equivalence."
