Politicians in the European Parliament have rejected a proposal which would have seen fund managers’ bonuses limited to 100 per cent of salary and forced part of the payment to be in the form of stakes in their own funds.
MEPs overturned the initial bonus cap proposal by the parliament’s Economic and Monetary Affairs Committee, contained within draft Ucits V fund rules, voting instead for stricter rules regarding the disclosure of how fund managers are paid.
But performance fees could still be outlawed after MEPs voted in favour of a rule banning funds from linking charges to performance.
Sharon Bowles, Liberal Democrat MEP and chair of the committee, voted against the bonus cap. She said such a move would have been “disproportionate”.
“European Ucits are an important brand globally and possibly the only retail investment product that has not been tarnished by the financial crisis,” Ms Bowles said. “We should not undermine their brand for the sake of an attention-grabbing headline and the vote today acknowledges this.”
In February German MEP Sven Giegold, who led the bonus cap proposals, told Investment Adviser that he wanted to ban performance fees and limit the bonuses fund managers recieved in order to better align the managers’ interests with that of their clients.
Daniel Godfrey, chief executive of the Investment Management Association, said: “Clear alignment with client interests and outcomes is fundamental to the asset management industry’s ability to support savers and the wider economy.”
The Ucits V rules must now be debated by the European Parliament with input from the European Council and European Commission.