European Commission tackles smaller funds’ access to single market

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Smaller fund managers’ access to the EU single market is being analysed in a consultation document launched this week by the European Commission, which examines the €13trn cross-border fund market.

“Smaller fund managers are telling us they face challenges when trying to sell their products in different countries,” says commissioner Jonathan Hill.

“I want to use this consultation to flush out what the main barriers are to funds operating across borders.”

The consultation was announced last month, with Hill telling an audience in Amsterdam that he had been approached by asset managers who said the EU passporting system “wasn’t working properly”.

The four-month consultation will question fund managers, investors, consumer groups, and those who market and sell funds about whether marketing rules, administrative arrangements imposed by host countries, regulatory fees and notification rules are barriers to the single market.

Guy Sears, interim chief executive of the Investment Association, says he was “genuinely encouraged” by the commission’s commitment to identifying “unjustifiable barriers”.

“The UCITS regime is already highly successful,” Sears says, praising Hill’s “broad vision to encourage growth and investment across the EU”.

Sears has previously said that passporting has been a key issue for the UK industry in the lead up to this month’s Brexit vote, but that it would remain high up the agenda even if the vote is to remain.

Alternative Investment Management Association chief executive Jack Inglis says barriers in the cross-border fund market have “held back growth in the European economy”.

“The imposition of registration and/or notification fees on funds or even sub-funds in a great number of EU jurisdictions can cost individual firms hundreds of thousands of euros annually.

“As well as reducing or removing the layer of fees, we also would ask the commission to consider removing or minimising other administrative and regulatory restrictions on marketing, especially in the case of funds that are marketed solely to professional investors.”

The consultation period will close on 2 October.