The current financial crisis has resulted in a ‘tidal wave’ of legislation which could damage the European economy, the Investment Management Association (IMA) has warned.

Speaking at The Lawyer’s second Funds Summit in Brussels, IMA chief executive Richard Saunders emphasised that the current 35 separate legislative measures that have been introduced to improve the current economic climate have been drafted in too quickly with an insufficient level of consultation being carried out beforehand.

Saunders highlighted that the proposed Financial Transactions Tax (FTT) will have unintended consequences and will not achieve its objectives. He argued that the FTT’s intention to increase taxation of financial institutions will miss its targets and consumers will have to bear the cost of that.

“The commission are not giving themselves enough time to get each measure right. But there is also an element of misplaced analysis of the financial crisis – an analysis that has underplayed the role of the banks and overplayed that of hedge funds, notwithstanding that it was the banks and not hedge funds that created the crisis,” he said.

Saunders also underlined the fact that policy makers do not have a complete understanding of current market conditions and as a result of this, many “ill judged proposals” have been made.

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