Head of UK fund industry trade body quits abruptly

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By Simon Jessop and Carolyn Cohn

LONDON, Oct (HKSE: 3366-OL.HK - news) 7 (Reuters) - The head of Britain's fund industry trade body quit his job on Wednesday following reports that several firms were on the verge of leaving the organisation.

Daniel Godfrey, chief executive of the Investment Association, was leaving with immediate effect, the body said in a statement, giving no explanation for his abrupt departure.

He will be replaced by Guy Sears, currently Director, Risk, Compliance and Legal, on an interim basis. The search was under way for a permanent replacement to lead a group whose members collectively manage more than 5.5 trillion pounds ($8.4 trillion) in assets.

A source familiar with the matter said there had been a difference of opinion between Godfrey and the board, which felt a new leadership was needed, but added no single event had triggered his departure.

The move follows media reports that fund firms, including M&G Investments, the fund arm of insurer Prudential (HKSE: 2378.HK - news) , and Schroders (LSE: SDR.L - news) , were leaving or considering doing so because of concern about how the trade body was being led.

A second source familiar with the matter said M&G was still an active member of the IA (KOSDAQ: 038880.KQ - news) , but had given notice that it did not intend to renew its membership. That position stood on Wednesday despite Godfrey's decision to quit.

A particular worry for some managers was Godfrey's focus on transparency of fees, fund performance and remuneration -- also a concern of regulators -- over other issues such as pensions saving, the reports said.

Britain's asset management sector is having to decide how to respond to more intense scrutiny on several regulatory fronts.

Gina Miller, founding partner of investment manager SCM Group and leader of the True and Fair Campaign, which lobbies for fairer fees in fund management, was critical of members for appearing to abandon the trade body in a row over transparency.

"It (Other OTC: ITGL - news) is an astonishing indictment of the UK fund management industry that even half-way measures aimed at bringing in genuine transparency...are seemingly met with complete refusal by the big guns in this shoddy industry," she said.

The UK's Financial Conduct Authority is set to unveil the terms of a sweeping review of fees charged by the sector, and the Bank of England is also studying whether changes are needed in market practices in relation to handling lower liquidity in trading.

The European Union's executive Commission is due later this year to publish a discussion paper on possible tougher rules on fee transparency and other measures to bolster safeguards and choice for investors. $1 = 0.6534 pounds) (Additional reporting by Huw Jones; Editing by Keith Weir)