Brussels, 03/07/2013 (Agence Europe) - On Wednesday 3 July, the European Parliament rejected by a slim majority (341 to 348 with 6 abstentions) the cap on bonuses for asset management (unit trusts) that an EP committee decided to introduce in March.
Sven Giegold (Greens/EFA), rapporteur for the EP on this issue, said after the vote: “Today is a black day for investor protection in Europe”. He was unhappy that MEPs had rejected the bonus cap for fund managers, which would have restricted it to no more than fixed pay. The EP also refused to adopt the proposal to sharply restrict performance commission for asset management companies.
Sharon Bowles (ALDE, United Kingdom) said a bonus cap like the one for banks in the CRD IV package “wouldn't have been “appropriate”. Syed Kamall (ECR, UK) agreed, saying: “The bonus cap would have been hugely damaging to the European asset management industry, which looks after the pensions and investments of millions of Europeans” and “would not have helped stabilise the financial system”.
Giegold welcomed adoption of the measure to force unit trusts to appoint a single depository for supervising investor payments and managing their assets. Depositaries would be required to keep their own and investors' assets separate, would not be allowed to act without authorisation and could be held liable in the event of financial loss. The member states are asked to decide on harmonised penalties (temporary or permanent ban on a member of the asset management company from doing business and the payment of fines of up to ten times the profits made) for failing to comply with the authorisation and information rules. Criminal penalties would also be possible.
If a unit trust loses money, its manager's salary would be reduced or removed. Half of the variable pay would be paid in the unit trust's shares and at least 40% of the variable pay would be postponed to encourage managers to take a long-term view. (EL/transl.fl)