In reviewing this year’s Regulatory Field Guide, we were reminded of renowned French marine biologist Daniel Pauly and his seminal paper, “Anecdotes and the shifting baseline syndrome of fisheries.” Pauly introduced the concept of “shifting baselines,” meaning that human perception adjusts to factors of the past as normal. He uses the example of fisheries and how people often fail to fully grasp the extent to which fishery stocks have been depleted. Rather than looking at the original population size, their baseline is shifted to society’s living memory. This results in a perception of a healthy fish stock that has actually been depleted by generations of overfishing.
This phenomenon of shifting baselines may explain the current mood around regulation in the asset management industry. There is a pervasive sense that the scale and pace of regulatory change has lessened in recent years. The number of regulatory panels at conferences is starting to dwindle, and coverage of regulatory change in the financial press is far less breathless than it was just a few years ago. While it is partly true that the pace of change has slowed, there remains a considerable amount of regulatory change ahead. The truth is that the last eight years of constant regulatory change has shifted the baseline for what the industry considers normal.
The fact that asset management may have become accustomed to a higher level of regulatory change does not obscure the fact that there is still a huge amount of work ahead. In certain policy circles, there are calls to review and reform some of the regulations that have been implemented in the last few years.
If these efforts go ahead, they will almost certainly kick off another period of regulatory change. Either way you look at it, the asset management industry is set to face a high amount of regulatory change for the foreseeable future. Our 2017 Regulatory Field Guide is our biggest yet and features insights from regulatory experts at Brown Brothers Harriman and the asset management industry.
We hope you find this guide informative and helpful as you prepare for the regulatory challenges ahead.