Single market for fund firms under threat

 
Michael Bow
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TWO THINK tanks are calling for an overhaul of EU fund management regulations after they said current rules impede the single market.

Open Europe and New City Initiative said fund managers across the continent are forced to pay over €1.5m (£1m) of additional initial costs per year if they market their funds to other EU states, as well as €1.4m of on-going yearly maintenance costs.

Both groups are calling for the removal of national cost barriers to the distribution of funds, which they say impedes the single market.

“Currently, the trade-off between high levels of regulation and a true free trade zone, with all its benefits, needs significant improvement,” Dominic Johnson, chairman of New City Initiative, said.

The EU operates a passport system for funds, which allows asset managers authorised by a watchdog in one EU state to sell their products to investors in every other state.

However, the report says some national regulators are also charging supervisory fees on fund managers based in other states, undercutting the idea of the single market.