I don’t want to get involved in the Brexit debate. I’m firmly in the Remain camp but I respect the views of those who aren’t. That said, the funding of the Leave campaign does raise serious questions about the political influence wielded by industry lobby groups.
According to the Financial Times, figures released by the Electoral Commission show that almost half of the funding received by the pro-Brexit campaign between February 21st and April 22nd came from the investment management industry. Two other financial sectors — banking and insurance — have also made large donations.
To be fair, asset managers have also contributed large sums to the Remain campaign, though nowhere near as much.. And of course, the likes of Peter Hargreaves, Jeremy Hosking and Alexander Darwall are doing nothing wrong in lending financial support to the Brexiteers. But, as a country, we need to ask why it is that one industry consistently makes more political donations than any other, and whether that’s healthy for our democracy. Asset managers, as a group, are also, by some distance, the biggest donors to the Conservative Party.
It’s well known that the European Commission is intent on providing greater protection to investors, and consumers of financial services more generally, through its new directive, MiFID II. Also, of course, the Conservatives have been particularly vocal about protecting the interests of the City of London from “interference” from Brussels. When, in 2014, for example, David Cameron was asked to nominate a new European Commissioner to oversee financial services, he chose the former fund industry lobbyist Lord Hill.
Whether or not any of this has prompted asset managers to support Brexit and the Conservatives, we can only speculate. But the fact that a single industry can have so much influence over the outcome of UK general elections, and decisions of such huge national importance as our membership of the European Union, does seem to me a very legitimate cause for concern.
One more thing. The Leave campaign has made a big issue of the Remain camp spending public money on getting its message across. It must be remembered, though, that we, as taxpayers, are actually the biggest clients of the fund industry. On our behalf, the Treasury pays more than £50 billion a year into the industry in the form of pension tax relief. This is, effectively, a gigantic public subsidy for an industry that frankly doesn’t need one. It also means that UK taxpayers are indirectly contributing to the Leave campaign as well.
Whether or not the UK remains an EU member or not, the issues around political lobbying and donations require careful attention.
Related posts:
What would Brexit mean for UK investors?
Has MiFID II been kicked into the long grass?
Robin is a journalist and campaigner for positive change in global investing. He runs Regis Media, a niche provider of content marketing for financial advice firms with an evidence-based investment philosophy. He also works as a consultant to other disruptive firms in the investing sector.
