Big investors hit out at EU over retail fund rules
BlackRock, Schroders and six other global asset managers have urged Brussels to overhaul new rules aimed at protecting consumers, but one MEP warned their move would result in ordinary investors being misled.
Senior executives from eight fund houses, which collectively manage more than $8.5tn of assets, have written to Jonathan Hill, the European commissioner, to complain about the legislation.
The fund executives’ letter, seen by FTfm, says the rules are “not evidenced based, will not help consumers, and will not command respect”.
They called on the European Commission to amend the rules, which form part of a wider piece of regulation known as Priips, or risk leaving consumers without the “high-quality information they deserve”.
But the chief executives’ stance has been criticised by Sven Giegold, the influential Green MEP, who warned the changes demanded by the asset management executives “would mislead ordinary investors”.
He added: “It is a pity that the fund industry is coming forward with questionable demands.”
Under the draft rules, which are expected to be signed off by the commission, the EU’s executive arm, this month, the long-held practice of asset managers including information on a fund’s past performance in key documents for investors will end.
Instead, fund houses will be required to provide guidance on how investment products are likely to perform in the future, based on three scenarios: unfavourable, moderate and favourable.
In the letter, the executives called on Brussels to allow past performance to be included alongside the future scenarios, arguing this would “provide historic proof of an active manager’s ability (or not) to regularly outperform the fund’s benchmark”.
The chief executives additionally called for changes to the proposed methodology for calculating and disclosing transaction costs.
Senior officials from Allianz Global Investors, Axa Investment Managers, Nordea Asset Management, Fidelity International, Robeco and JPMorgan Asset Management also signed the letter.
Any changes to the rules would probably delay the introduction of Priips, which is due to come into force at the start of 2017.
The commission declined to comment. Last week, Mr Hill said at a meeting of the European Parliament’s influential economic and monetary affairs committee that the commission was “committed” to meeting its deadline to approve the regulations by the end of this month.
“We are not planning to change the substance of the standards,” he added.
Once signed off by the commission, the rules will go to the European Parliament and council, the EU’s two other arms, for approval.
Helena Walsh, executive director at Cicero, the lobbying company, said MEPs are likely to support the rules, because they are aimed at defending the rights of consumers.
“While there is a consolidation of efforts on the asset management side to influence this regulation, it hasn’t moved the dial. The parliament has come to its own conclusion to meet the deadline,” she said.