UK trade body shifts focus

It hasn’t been a ride in the park for the UK Structured Products Association (UKSPA) since its launch in November 2009 and still today it does not represent the whole of the UK structured products industry. However, the UK trade body has come a long way and is now playing a different game after an initial period focused on adviser education and a reactive approach to bad press. Today the UK SPA has a wide representation of individual manufacturing and distribution firms and is at the forefront in tackling new regulatory requirements for the industry.

“The industry has come of age, and not before time, and all the work we have done with our members shows that it has now reached a level of maturity that will allow us to continue growing this essential market,” says Zak de Mariveles, who has been at the helm of the trade body since 2013. “Individual firms have strived to enhance the service they provide and as an industry we have made significant improvements in a range of areas from financial promotions to product governance, providing the solid and robust framework our clients come to expect from such a mature industry.”

The association has taken its time to find its feet and although the original focus was primarily representing the independent financial adviser (IFA) market, the trade body’s activities, and relevance, have shifted significantly. The industry, says de Mariveles, now speaks with one voice, with one vision, recognising the “whole is far stronger than the sum of its parts”.

“The FCA, and our members, are aware we represent the vast majority of the UK manufacturers across all distribution lines (retail, private banking, wealth management…), an approach that has also increased the appeal for other firms to be part of the association,” says de Mariveles.

In the last year and a half, the association has expanded its membership with up to five additions which were followed by Mariana Capital earlier this year, and it’s rumoured that another tier one issuer of structured products is set up to join the UKSPA ranks as market players realise that the most efficient way to engage with the regulator is from a unified front. In the past, some of the misinterpretations in how regulation was to be implemented in practical terms were due to the principals based approach of regulation and a lack of precise dialogue with the regulator, according to de Mariveles.

“Individual members can differentiate themselves with the types of clients they talk to, the products they create and the pricing they provide, but we all recognise that if any member fails from a regulatory perspective, they fail the industry as a whole,” says de Mariveles. “The more representative of the industry you are, and the better the quality of the output you provide, the more willing the regulator is going to be to work with you because they know it is going to be a worthwhile exercise."

In addition to increasing its membership base, the UK SPA has been very active on a number of fronts boosting its output with the launch of a guide to structured deposits, as well as a product website, product codes and risk ratings for IFAs.

“We are now providing valuable market research for the industry about what is going on in the market and its impact for structured products,” says de Mariveles. “We have defined a set of risk ratings for the industry across all the products and standardised naming conventions.”

The association, says de Mariveles, has also provided a single portal for advisers to view the products available in the market, as well as creating best practice industry standards in areas such as stress testing and benchmarks, and providing services for its members regarding the target market and complexity testing on behalf of the industry.

It has taken time, effort and three chairmen but the association has now moved from a reactive mode to a proactive hands-on approach, “addressing the big issues in the industry”, says de Mariveles. “We are deploying direct action to get to the heart of the problems and create industry wide responses,” he says. “We can react quickly to issues raised by the regulator, and the feedback we get from the FCA is positive, as it now sees us working together to find solutions and address their concerns.”

And the work continues, according to the Mariveles. “Soon the UKSPA will be producing educational videos for the general public, providing real world performance data of retail products sold in the UK, helping to demonstrate how they provide value to investors, all provided with a level of granularity that allow investors to make better informed decisions,” says de Mariveles adding that the build-up of the association's membership will remain a target.

One of the key achievements of the UK SPA, says de Mariveles, has been to bring together the leading participants in the industry… “sharing the best practices, tackling the problems together, and working collectively, alongside the regulator, for the good of the industry as a whole”.

“With regulators seeing this as the role of the industry itself, the logical approach is to have a trade body coordinating the efforts/thinking of all its members, not only with the aim of defining a standard, as opposed to letting each member to develop its own potentially conflicting approach, but to addressing the practicalities of how the industry should conduct its research in this area,” says de Mariveles.

The UKSPA is supported by nine product issuers: Commerzbank, Credit Suisse, Deutsche Bank, Goldman Sachs, Investec, Lloyds Banking Group, Morgan Stanley, RBC Capital Markets and Societe Generale; and four UK distributors: Mariana Capital, Meteor, Reyker, and Walker Crips.

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