The influential trade associations for asset managers, banks and insurance companies in the UK have lined up to express their “serious concerns” about the European Commission’s proposed tax on financial transactions.
The Investment Management Association (IMA), the Association of British Insurers (ABI) and the British Bankers Association (BBA) have signed a joint letter alongside other financial services industry representative groups to UK Chancellor George Osborne.
“As trade associations representing both the users and providers of financial services, we are writing to you in order to highlight our serious concerns over the proposed EU Financial Transaction Tax (FTT),” the groups say.
They urge the UK government to “continue to take a strong stance against the tax” and work with other EU member states which also opposed the idea.
European Commission President Jose Barroso unveiled plans to introduce the tax last month with the objective of raising up to €55bn a year and curb excessive risk taking in the financial markets. The proposal calls for a 0.1% tax on equity and fixed income trades and a 0.01% tax derivatives deals.The trade bodies argue the FTT would not only hit economic growth but also increase costs within the financial system and “impede the efficient operation of markets”.
This would affect not just market participants but “the vast array of end users who benefit from an efficient financial system” – leading to higher mortgage costs and reduced pensions. The other trade bodies include the Association of Private Client Investment Managers and Stockbrokers (APCIMS), the London Energy Brokers’ Association (LEBA) and Wholesale Market Brokers’ Association (WMBA), the Association for Financial Markets in Europe, the International Swaps and Derivatives Association (ISDA), the Alternative Investment Management Association (AIMA), the Futures and Options Association (FOA) and the International Securities Lending Association (ISLA).
Leading figures from the responsible investment industry voiced their opposition to the FTT plans at Responsible Investor’s ESG Europe conference this month. Speakers warned of the “unintended consequences” of less engaged ownership from investors.
Faith groups such as the Methodist Church in the UK, however, have welcomed the idea. Link to BBA site