Fund manager reprieve as cap vote is delayed

Michael Bow
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EU PLANS to impose a strict cap on fund manager bonuses have been delayed, raising hopes tough curbs on performance pay in the sector will be eased.

A vote in the European Parliament scheduled for next week has been pushed back again as policymakers seek more time to draft an alternative to the proposals. It was originally delayed from last month.

The rules, which would have outlawed fund manager bonuses exceeding annual pay, will now be renegotiated ahead of a crunch meeting in early July. German MEP Sven Giegold, the man behind the policy, said he had requested the delay “to continue political negotiations”.

Sharon Bowles, head of the economic and monetary affairs committee, said: “A one-to-one pay-bonus ratio for fund managers is looking a bit less likely than it was earlier this year.”

It had been feared fund managers, professional stockpickers who try to make money for their customers, would be hit with similar pay curbs designed for bankers, despite operating in a separate sector.

Conservative MEP Syed Kamall, who will be involved in the negotiations, told City A.M.: “People are now coming to the realisation that bonus caps are rather crude. All groups are trying to find a compromise about transparency and aligning performance with reward. We are trying to find a solution.”

Somerset Capital Management chief executive Dominic Johnson, co-founder of think tank New City Initiative, welcomed the delay. “We hope now that the NCI can spend these next few months engaging with law makers, to draft some sensible changes,” he said.