Influential British MEP Sharon Bowles, who is helping draft the law, told City A.M. last night that the regulations would be re-written to “tailor” them to the fund management industry, following criticism the plans were cut and pasted from a similar high profile policy capping bankers’ bonuses.
“We knew that we needed to do some tweaking, so the idea is that we will revisit the bonus scheme,” Bowles, who chairs the parliament's economic and monetary affairs committee, said. “It will be different, but I don’t know how different.”
European politicians sparked alarm in the City yesterday after voting for a draft law curtailing the pay of managers running European-wide money funds, known in EU-speak as Ucits.
The current EU proposals would outlaw fund management bonuses that exceed fixed annual salaries.
The plan would also impose time frames on when some deferred payouts could be taken from three to five years.
Despite the draft law gaining a majority of votes there was still widespread division among MEPs, with the vote passing by a slim majority of 22 to 18. The law is being driven through Brussels by German MEP Sven Giegold. Yesterday he said the cap would “strengthen investor protection and reduce risky speculation”.
“It will also complement the recently-adopted EU rules capping bankers' bonuses, ensuring these rules cannot be circumvented and providing for a level playing field,” he added.
“It will have the opposite effect of what they are seeking to achieve,” Investment Management Association chief executive Daniel Godfrey told City A.M. “It will raise costs for consumers and reduce the link between value added and pay.”
Bowles said she is will meet with Giegold today to thrash out the re-drafting of the law.
“I put forward some proposals last week saying you have to tailor them better to the investment firms. My point has been accepted,” Bowles said at an event at St. Pauls last night.