In February, Milestone Group, in conjunction with Funds Europe, ran a survey on the oversight of outsourcing providers in a post-Brexit market. The rationale, says Paul Roberts, CEO of Milestone Group, was to see how prepared market participants are for Brexit just over a year ahead of the start of the transition period.
“More specifically, we wanted to see what role Brexit is playing in leading firms to reconsider their operating model and to revisit their oversight strategy in what will be a more distributed funds market,” says Roberts.
The issue is complicated by the level of uncertainty that permeates Brexit. For example, when asked if the UK will secure a deal to retain full EU passporting rights, only 30% of respondents are confident it will. This is unsurprising given the commentary coming from both the EU and the UK on the impact of the UK exiting the customs union and the single market. More surprising were firms’ responses when asked if they were re-evaluating their fund operating model in light of Brexit (see Fig 1). In addition to an even split between those that were and those that were not re-evaluating, there was also an even split in representation between those based in the EU and those based in the UK that were reviewing their operations.
“This shows that Brexit is an issue that goes far beyond UK firms,” says Roberts. In fact, it could be argued that firms in the EU could be more concerned about the impact of Brexit than those in the UK
given the responses to the survey. For example, the majority of firms that plan to review and upgrade oversight of their outsourced processes or IT systems due to Brexit are those headquartered in the EU but with operations in the UK rather than vice versa.