Tax
Interview: Tobin Tax Would Hit Asset Management Clients
The Tobin tax will make an already pricey industry more expensive for customers, according to David Norman, chief executive of TCF Investment, the UK asset manager.
Norman describes the debate as a massive conflict where politicians want to regulate the market to drive costs down but risk doing exactly the opposite by imposing a tax on financial transactions.
“Europe does not like London because it has a disproportionate share of trade, so they think a Tobin tax will sort it out,” Norman told WealthBriefing. “But that will put the price up and who’s going to pay for it? The customer. So why is that a good deal?”
The French and the Germans are pushing for the tax in Europe. It is named after the late Nobel Prize winning economist James Tobin, who wanted a rate of 0.5 per cent of transactions. Discussions have evolved around rates ranging from 0.1 per cent to 1 per cent. The tax has been backed by the likes of Bill Gates and George Soros, but the UK finance minister, George Osborne, has said that it would mean a tax on London and that he would only support it if it were imposed globally.
“If they want to stop people from trading too much, why don’t they do just that,” Norman said. “If you have a retail fund then you are not allowed to trade more than 25 per cent of the portfolio a year. That is the only way to stop people from trading.”
Norman, with a background at Credit Suisse, is very critical of pricing in asset management. He set up TCF Investment at the beginning of 2010 and it has now about £30 million (about $48 million) in assets under management.
“The issue is that you have layers and layers of complexity inside retail funds; securities, lending, stock lending, swap based contracts, derivatives, custodians, funds supermarkets, platforms," Norman said. “You need to have professional trustees, somebody independent and wise. Where is that person in retail funds? The fund manager runs the money and does the administration. The depository is appointed by the fund manager and is usually the same group as the custodian. So there is nobody looking after the consumer’s interest anywhere. At an absolute minimum, the depository should be independent.”