Govt pledges to oppose EU fund manager bonus cap

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The UK has pledged to oppose EU proposals to cap fund manager bonuses in the same way as bankers.

Yesterday, the EU voted to cap bankers’ bonuses at a maximum of two times their annual salary as part of the CRDIV rules. The UK was outvoted 26 to 1 when it strongly opposed the move along with the Financial Conduct Authority and Bank of England.

In March, the economic and monetary affairs committee voted to cap fund manager bonuses at 100 per cent of their salary with half being paid in shares in the funds they manage.

The move is fuelled by concerns that bankers’ may use Ucits rules to dodge the bank bonus cap and is expected to be put to a European parliamentary vote soon.

In a written parliamentary questions, former Treasury financial secretary Lord Paul Myners asked the Government whether it supports EU plans to cap fund manager bonuses.

Treasury commercial secretary Lord Paul Deighton said: “The Government would not support such a measure. The Government supports the European Commission’s goal of better aligning investor and fund manager interests and to tackle conflicts of interests without hampering the efficient operation of Ucits funds. More intrusive and prescriptive requirements would run counter to this aim.”

British MEPs have hit out at the EU moves. Econ chair Sharon Bowles recently told Fundweb sister publication Money Marketing she is working to change the cap so it is ”more to everyone’s liking” and MEPs are working on alternative proposals.