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Legal & General Group Plc

L&G

For over 185 years we have provided financial services to customers across the UK.

Lobbying Activity

Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

18 Mar 2021 · AIFMD, MiFID

Response to Review of the appropriate prudential treatment for investment firms

7 Mar 2018

We welcome the opportunity to respond to the European Commission’s draft legislative proposal, and are supportive of the Commission’s aim of creating a tailored prudential regime for investment firms. Overall, we see the package, subject to our comments in the attached, as being a positive step forward for the industry and its customers. Currently, having to apply the Capital Requirements Directive (CRD) and Regulation (CRR) to investment firms has produced a regime which is ill-equipped to address the specific risks faced by firms, having been developed for the banking sector. LGIM believes the simplification and consistency of approach that the introduction of K-factors brings, as currently constituted, will result in a more level playing field being created for investment firms operating throughout the Union. We support the application of the new prudential regime at a solo investment firm level (noting the additional Group capital test for Groups containing investment firms). This approach creates a more consistent approach by capturing, directly in the Regulation, existing delegated derogations under Article 15 of the CRR which are not being uniformly implemented across member states. Applying the requirements at a consolidated level risks undermining the simplification and proportionality objectives of the proposals. For instance Groups containing both investment firms and Alternative Investment Fund Managers (AIFMs) firms could find that the requirements under a consolidated K-factor approach is significantly higher than the aggregation of the requirements of the solo firms within the Group under their respective regimes. Therefore we support the current proposals which apply at solo level. We also note and support the proposed risk-based approach to differentiating investment firms based on their risk profiles, which appears more proportionate. We agree that investment firms who do not conduct the MIFID activities of trading on their own account or underwriting or placing financial instruments on a firm commitment basis present less risk to markets. Indeed, LGIM firmly believes that firms who do not conduct these activities should not be viewed as systemically important investment firms. The identification of ‘systemic and bank-like’ investment firms should be based upon the business models of firms; the most important prerequisite for such institutions is a significant balance sheet exposure to other financial institutions. As you know, the vast majority of asset managers do not create systemic risk because they don’t trade as principal or hold client assets. It is essential that such institutions remain outside scope of the criteria for ‘systemic and bank-like’ and are thus subject to a regime which is proportionate to the actual level of risk that they pose to customers and the financial system. The new prudential regime should therefore maintain a high threshold for classifying investment firms as ‘systemic and bank-like’. The current proposals support this. We have provided feedback in the attached document on four areas where we believe improvements could be made to the proposals. 1) Definition of Assets Under Management 2) Clarity over the definition of K-AUM 3) The definition of liquid assets and our assertion that money market funds should be included in this 4) Suggestions ease the administrative burden of disclosure requirements
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Meeting with Sebastian Kuck (Cabinet of Commissioner Jonathan Hill)

2 Jun 2016 · Longevity reinsurance market and its interaction with Solvency II

Meeting with Denzil Davidson (Cabinet of Commissioner Jonathan Hill)

19 Aug 2015 · Financial Services Policy

Meeting with Jonathan Hill (Commissioner)

17 Jul 2015 · Financial Services Policy