Like elsewhere, Ireland’s investor services sector is undergoing a real-life stress test and Funds Europe recently spoke with some of the country’s professionals there about their experiences. Here we ask Laura Wadding of Deloitte and Irish Funds, and Liam Butler of Northern Trust about working from home, and fund administration. (Interviews were carried out in April/May).
LAURA WADDING (pictured), IRISH FUNDS OPERATION STEERING GROUP CHAIR AND PARTNER, RISK ADVISORY, DELOITTE
Apart from work, what else are you finding time to do at home since lockdown?
My two daughters (Charlotte and Sarah) are at home with me, so I spend a lot of time just being mom – cooking, cleaning, baking, making sure they feel safe and happy. When I get downtime, I like to go for a walk or read. My cousin in Australia launched a book club on social media, so I am comparing notes with family and friends from around the world.
I’ve also just signed up for some online exercise classes, which are good fun. So I am keeping busy, but I am very aware of the challenges that others are facing, and the commitment being made by our frontline workers. I take my hat off to them, and remind myself every day how lucky I am.
Do you support the notion put forward by trade body AIMA in the Central Bank of Ireland’s DP8 on outsourcing that asset managers ought to be permitted to participate in pooled audits of outsourcers in order to increase knowledge and be able to challenge providers regarding technology and data?
There is some feasibility to this idea. The European Banking Authority issued some guidance in 2018 on the potential to avail of pooled audits with respect to cloud outsourcing, and logically the same thinking could be applied to outsourcing by a fund or a management company to a fund administrator, for example. It would keep the costs down for asset managers, but there would need to be certain criteria in place to set a standard for the audit, to ensure that the scope is fit for the purpose of the asset manager, ensure that controls are adequately tested, maintain confidentiality and Chinese walls, manage conflicts of interest (this can be a particular challenge in the asset management sector as the fund, the management company and the fund administrator will all have appointed a statutory auditor, so there could be three audit firms precluded from participating in a pooled audit).
The Central Bank has now told asset managers they need to improve their cyber-security risk management – an issue that could be particularly important at a time of crisis. Do you agree with the Bank and, if so, why has the industry lagged on this issue?
I agree that this is extremely important. Cyber security is absolutely key at the moment, and has been for some time. During this crisis, the level of attempted cyber crime has risen exponentially, and we have seen this trend around the globe as countries try to cope with impact of Covid-19. Cyber criminals are opportunists and attack when firms and individuals are at their most vulnerable. This has been a topic on the Central Bank’s agenda for some time, driven by an evolving European regulatory and risk management landscape for financial institutions.
Many asset managers authorised in Ireland are part of much larger group entities and it is likely that much of the cyber risk is managed at a group level. The challenge for the Irish entity, therefore, is to demonstrate how that group infrastructure is applied to the local entity and to ensure that it also considers any local specific risks.
Understanding the risks, discussions at board level, having documented policies and procedures which might leverage the group but which are adapted to the local entity, are all important things to be able to evidence. Fundamentally, this is a real risk, one that is growing as we all become more digitally enabled in our working and home lives.
LIAM BUTLER,CHIEF OPERATING OFFICER, NORTHERN TRUST IRELAND
Apart from work, what else are you finding time to do at home since lockdown?
In a strange way, while work has been busy for everyone, we have all had less going on outside of work. For me, this has meant being able to spend more time together as a family. I have five children, so what is normally a very busy household with people coming and going constantly is a lot different at the moment. We have been taking walks together and spending quality time in the evenings. It’s been wonderful to be able to make time for family dinners outside the weekends.
All my children love sports and that is something we are all missing – in my case as a coach and a spectator, in their case as active participants
A return to normal, or the new normal as it will be, will also be welcome when it comes.
How would you describe life at the moment for fund administration firms?
Life for fund administration firms is certainly different at the moment. We have all found ways of working that have helped us to ensure continued and effective delivery of solutions to our clients. All our teams have put in huge efforts to ensure continued service, and our IT infrastructure and teams continue to evolve to new demands that come from remote working.
Similarly, our clients have also been adjusting and adapting to new ways of working. Together we focus on ensuring we are communicating more proactively, both internally and externally.
The main challenge for fund administrators and our clients is to continue to work to make the adjustments to our new working arrangements and ensure that everyone feels supported. When not meeting face-to-face, this is undeniably harder, but it’s making our teams collaborate more and we’ll come out of this stronger.
The markets and investor sentiment is probably the main change for our clients. It is always tricky when markets are so unpredictable and performance has been hit by market downturn. However, as always, some clients see this as a time of opportunity and are keen to get products to market, so that is good to see for us as a service provider and as an industry.
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