MEP warns industry to ‘stay alert’ over fresh EU bid to cap fund manager bonuses

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Conservative MEP Syed Kamall has warned the asset management industry to “stay alert” to fresh EU proposals to cap fund manager bonuses.

Last month the European Parliament narrowly voted against capping fund manager bonuses under Ucits V rules but proposals could be resurrected in trialogue negotiations.
The UK strongly opposed the move after the introduction of a bankers’ bonus cap under CRDIV earlier this year.

Kamall says: “I hope we have seen it off but we don’t know whether another country may try and introduce it again at council during trialogue negotiations. We are hoping it is the high watermark of bashing for the finance sector.

“You can see a move down the round to place further restrictions on the asset management sector so we have to stay alert all the time.”

Investment Management Association prudential specialist Irving Henry says the fund manager bonus cap could also return if Ucits V is not finalised well before the next Parliament elections in May 2014. If the rules are not agreed then a fresh draft will have to be voted on again in the new European Parliament, which could include a bonus cap.

He says: “Unless it is nailed down by the middle of November or December this year then we will have a big fight on our hands in the new parliament.”

Clayden Associates director Dan Clayden says: “A fund manager bonus cap is uneccessary as long as incentives are tied to long-term quality.”