Mixed reaction to Commission proposal
16 July 2008

Written by Sophie Baker

The European Fund and Asset Management Association (EFAMA) has welcomed the European Commission’s UCITS IV proposal issued on 16 July.

However, Oliver Lodge, member of Kinetic Partners, expressed his concern, labelling it a “mess”. He said: “The proposals issued by the European Commission yesterday on the rules governing regulated funds, usually called UCITS funds, are a mess. The proposals have taken an excruciating five years to develop, and we are told that they will not be implemented for a further three years. Yet the committee of European securities regulators (CESR) has been given just three months to respond on how to make it work. The EC is rushing the process of consultation and assessing the practical implementation of the new rules, while inordinately delaying their introduction. This seems to be exactly the wrong way round.”

The proposal aims to simplify the UCITS notification process, facilitate cross-border mergers of funds, allow fund assets to be pooled cross-border, revise the simplified prospectus to provide investors with key fund information, and increase cross-border supervisory cooperation. These processes are, according to EFAMA, crucial to improve the efficiency of the industry in the interest of investors, and to maintain its global competitiveness.

The Commission’s declaration regarding the management company passport and the mandate to CESR for technical advice has also been welcomed by EFAMA, as has the declared intention to come forward with an appropriate proposal in time to allow for adoption of the whole package during the current legislature.

The Association has pledged its full support of all European legislative bodies as well as the French and Czech Presidencies in their efforts towards a successful adoption of the UCITS IV package, including the Management Company Passport, before the end of the current Parliament’s term.