04/07/2013
MEPs legislate asset managers' pay scales
The economic and monetary affairs committee of the European Parliament on 3 July passed amendments to the new UCITS V directive, which will regulate mutual funds.The new arrangements provide that the pay scale for a manager may be reduced, or blocked, if a UCITS product loses money. Half of performance commissions must be paid in the form of shares in managed funds, and at least 40% must be deferred, a statement says. In other words, MEPs are cointinuing with plans to limit variable pay scales for fund managers to the equivalent of their fixed salaries, as for bankers.“Mutual fund managers should not be betting investors’ money on high-risk financial instruments. The rules adopted will protect these investors with a clarification of the roles and responsibilities of the professionals who manage their money by introducing incentives to promote long-term performance of investments, rather than short-term gains,” says reporter Sven Giegols, cited in a statement. The draft adopted yesterday also includes a large section on depositories, which includes the clauses proposed by the Commission a year ago. Mutual funds will be required to designate a single depositary, whose liability will be engaged in the event of losses of assets, or in the use of sub-depositaries.The reception from professionals has been positive. The European fund and asset management association (EFAMA) claims that this vote illustrates the importance the European Parliament assigns to mutual funds and the protection of investors. The work is still far from done, and the professional association will continue its dialogue with the Parliament, the Council and the Commission.
