The European Parliament has narrowly voted to reject plans to cap fund manager bonuses opting for greater disclosure of payments instead.
MEPs overturned Ucits V proposals from the economic and monetary affairs committee by 348 votes to 341, but fund managers will see more transparency over how pay is awarded.
In March the committee voted to cap fund managers’ bonuses at 100 per cent of their salary with half being paid in shares in the funds they manage.
The UK Government has pledged to oppose any EU move to cap fund manager bonuses despite being outvoted with the introduction of a bankers’ bonus cap earlier this year.
Liberal Democrat MEP and Econ chair Sharon Bowles voted against the “disproportionate” proposals for a cap.
Bowles says: “We have to be proportional, not reactionary, when it comes to regulating the financial markets. However, I fully supported the principle of performance-related fees, whereby a fund manager’s bonus is linked to how well the fund performs, so I am sorry to see this was not maintained today.
“European Ucits are an important brand globally and possibly the only retail investment product that has not been tarnished by the financial crisis. We should not undermine their brand for the sake of an attention-grabbing headline and the vote today acknowledges this.”