Commission doesn’t bias distributors, say fund managers
European fund managers have become increasingly vocal in their opposition to potential commission bans on the continent, at odds with the FSA’s RDR approach.
Speaking at a European Fund and Asset Management Association (Efama) conference, representatives from French and Dutch fund managers argued that such a ban would severely hamper their distribution and disadvantage their clients.
Christian Dargnat, vice president at Efama, said: “We [fund managers] have never been able to demonstrate to the regulators that [distributors] sell funds not because of the commission they get but because they believe in the performance and in the process.
“If they just go for the highest fees then their business models are weak. We haven’t been able to convince the regulators of that.
“The situation is not black and white. I don’t understand why we haven’t been able to find a way of allowing people to choose [between commission and fees]. If you are in front of something which is unclear you don’t just ban it.”
Laurent Ramsey, head of global distribution at Pictet Asset Management, said banning commission was the “easy solution”, but argued that the “more intelligent” way to address any fears of bias was to force through transparency measures, citing “objective and transparent” models currently being used in the US and Japan.
The European Commission is currently debating amendments to the Markets in Financial Instruments Directive (Mifid), including potential restrictions to the payment of commission to distributors, similar to the ban coming into force in the UK on December 31 2012.
German MEP Markus Ferber earlier this year submitted draft amendments to Mifid to politicians which appeared to step back from the European Commission’s (EC) initial proposal to ban commission outright.
However, there are still differences of opinion between the EC, the European Parliament and the European Council – which consists of representatives from national regulators – as to whether some form of commission ban is appropriate.
As well as fund managers, European financial advisers have also hit out at the ban, with Vincent Derudder of Fecif calling the proposal “highly anti-democratic”.