Mr. Pat Lardner:

At the end of 2016, total world-wide investment fund assets amounted to €41.3 trillion. Investment fund assets domiciled in Ireland amounted to €2.1 trillion, representing 5% of global investment fund assets and 15.2% of European fund assets, making Ireland the third largest home for regulated funds globally and the second largest in Europe. The growth of the industry has resulted in success for investors, providers of funds and fund services and for Ireland, both directly and indirectly, through the employment of more than 14,000 people living in at least 15 counties throughout Ireland and by providing a compelling proof statement of the country’s ability to develop and scale specialist financial services. In this regard, I also note our involvement in and support of the IFS2020 strategy and the IFS Ireland banner brand through our own promotional activity and in providing secretariat support to the industry advisory committee under IFS2020.

The United Kingdom’s decision to leave the European Union will have a significant impact on the European and Irish investment funds industry, given the level of interconnectivity that has existed over many years. Specifically, UK individuals and institutions have invested significant sums in EU-regulated investment funds that are domiciled in other EU countries, including Ireland. EU-based firms are significant providers of investment management services to EU-regulated funds that are distributed throughout Europe and beyond. These considerations will be relevant to all EU countries but especially those, like Ireland, which are recognised funds centres. According to the data available to us, more than 2,000 Irish-domiciled funds are registered for sale or distributed in the United Kingdom under passporting arrangements. Approximately 170 UK-based firms provide services via delegation to Irish domiciled investment funds. In addition, we believe that there will be changes to the way in which asset and fund management services are structured and delivered across the EU, which will provide opportunities for Ireland if we can provide solutions. I stress the word "solutions".

It is important to acknowledge that there are risks to Ireland’s industry associated with the decisions firms will make. There are also existing measures in the IFS2020 strategy action plan for 2017, which will further support the development of the industry, for example, the updating of Ireland’s investment limited partnership legislation.

In terms of our activity and priorities, like most other entities we have structures within the association to respond to Brexit. Given the nature of our sector and membership, Irish Funds is the most active of the financial services sector trade bodies in Ireland when it comes to international promotion. Between April 2016 and the present, we have hosted over 20 international promotional events in 15 different cities across the world.

Additionally, last week we hosted our 19th Annual Global Funds Conference with delegates from Asia, Europe and North America attending. Given the Brexit debate a significant focus has been on the solutions that Ireland can provide. The emphasis on solutions is key and we know there is interest in what Ireland has to offer. In saying this I must acknowledge that much remains uncertain. One of the few consistent features of the process to date is that most people’s assumptions regarding what will happen, when it will happen and how it will happen have all been incorrect. At this point our working assumptions are: the UK will leave the Single Market and Customs Union; the likelihood of a special deal in relation to financial services is low; and with the disconnect that exists between the timeframes linked to the political processes and those governing commercial decision making businesses are now moving to making their own decisions.

Ireland must demonstrate unambiguously, not only to the UK but also to the wider international market that the funds industry here is prepared for Brexit, ready to facilitate both existing and new business and remains in a strong position to act as a bridge to the EU market. We do not see this as “I win, you lose” situation. Instead we are focusing on providing solutions. Today we provide solutions to both EU-based managers and those outside the EU and will continue to do so post-Brexit.

We have three over-arching priorities in discussing Brexit with stakeholders at home and abroad. We represent these as overlapping circles. I will turn first to the issue of inbound distribution access. This means maintaining continuity of UK investor access to Irish or EU domiciled funds, or in other words the ability to distribute an Irish fund into the UK market. The second circle is the maintenance of UK management rights. Many Irish domiciled funds appoint an external investment manager based in the UK and this needs to continue. The ability to delegate is a vital component of efficient fund structures in Europe. The third circle is growth opportunities. There are opportunities for Ireland to further expand its asset management and fund services offerings provided we: maintain an agile and effective toolkit for product and service providers; deliver a regulatory and business environment which is in equal parts robust, clear, responsive and efficient; and continue to promote Ireland in a relentless, joined up and compelling manner.

Before concluding I wish to make a number of final points. There is insufficient private saving occurring when it comes to long term needs. This is not caused by Brexit but we should not allow the Brexit process to disrupt existing savings patterns. Functioning and minimally disrupted savings and investment markets benefit investors, policy makers and economies. Given the size of the total European funds industry, greater emphasis should be placed on seeking effective grand-fathering and transitional arrangements.

Brexit is surfacing both political and competitive tensions across the EU which we should not ignore. Any moves to limit the access investors have to a wide breadth of fund choice or which seek to create barriers to the supply of expertise which supports our global industry should be resisted. Most of the focus in relation to Brexit is relatively short-term. We must not lose sight of the fact that one of the most vocal proponents of open markets and free flows of capital, which have benefitted not only Ireland’s funds industry but many other industries here, will no longer be at the policy, regulatory and political tables within the EU. This requires a continuing and significant uplift in Ireland’s contribution to these debates, especially as policy is formed. Our bilateral relationships with the UK at all levels and especially in relation to regulatory matters remain very important. Given we do not know the final outcome we will need to be poised for quick and effective action if required.

Promotion of the industry, which is funded by our members and the commercial sponsorships we seek, is done in close co-operation with the office of the Minister of State for financial services, various Government Departments, especially the Departments of Finance and Foreign Affairs and Trade, as well as IDA Ireland. We acknowledge the support received and equally point to the value we have provided by developing and building a number of valuable platforms globally for Ireland’s international financial services message to be broadcast. We look forward to finding new and innovative ways to partner with Government to build on the already significant contribution of the industry to Ireland’s national economy which will also support the IFS 2020 strategy.