On Tuesday European finance ministers were trying to hammer out an agreement on the controversial Alternative Investment Fund Managers (AIFM) directive. Any agreement though was scuppered by a dramatic late intervention by Gordon Brown, which saw discussion of the legislation dropped from the agenda of the meeting of finance ministers
Industry bodies had been making last-ditch attempts to strike out measures that it is claimed could have dire consequences for the City.
At the heart of the debate are the British Venture Capital Association (BVCA), which represents the British private equity industry, and the Alternative Investment Management Association, lobbying on behalf of the hedge fund industry.
The BVCA's external operations manager Emily Hartman noted that the organisation had 'stepped up' its comms efforts ahead of the 'critical junction' this week. 'We have come out very strongly, saying this is an area of national importance and the UK needs to make a stand against it,' she said. Its most pressing concern is the 'dire consequences' of the third country rules, which would limit Europeans from investing in funds operating outside the EU.
UK politicians have been lobbied forcefully around the issue, but the tenor of the comms effort has been more generalist.
One source close to the industry lobbying campaigns has said: 'Politicians are not going to care if you talk in overly technical terms, so the arguments have been put in language they will understand - concepts like its effects on jobs, pensions and tax revenue.'
The arguments from the private equity and hedge fund industries have gained traction in the UK. Both the Government and the Conservative party have pledged to fight aspects of the proposals, while City minister Lord Myners has warned against 'regulatory hypochondria'.
But support has been harder to find on the continent, many of whom want to tighten regulation on what is seen as a UK-dominated industry.
Myners has reportedly conceded that 'we can't block this', but industry sources have praised the comms effort.
'Within the hedge fund industry, there has been a much more cohesive and co-ordinated response than there was in the early stages of the proposals,' said Henrietta Hirst, MD of Par Excellence PR.
Anthony Payne, founding partner at Peregrine Communications, argued that too much of the lobbying burden had been placed on hedge funds and private equity: 'The pension funds sector is among those most affected and it could have done far more.'
This week's reprieve is, however, only temporary and the prospects of radically altering or blocking the regulations remain relatively slim. The week's events represent 'another step in the unfolding narrative', according to one source, who pledged that a high profile campaign against restrictive legislation would continue.
HOW I SEE IT
- Anthony Payne, Founding partner, Peregrine Communications
The campaign has been reasonably effective in trying to differentiate hedge funds from what caused the real economic problems. But from a PR perspective, the latest news from Greece could not have been more catastrophically timed. It really has not helped the cause when there are articles suggesting hedge funds have caused damage in another EU member state.
- Paul Downes, Chief executive, Merlin
The Treasury representatives who comprise the UK lobbying party have been well advised in recent months by industry lobby groups for hedge funds and private equity. The have both done good jobs in terms of highlighting the potential threats the directive poses to the British economy. The great fallacy of the directive is that it is assumed that alternative investment funds had a major role in causing the economic crash, but that was not the case - it was the banks.