Investors speak out against EU plans for fund regulation

Date: Tuesday, July 14, 2009
Author: Rob Davies, City A.M.

INSTITUTIONAL investors yesterday rallied behind the hedge fund industry’s efforts to combat the European Commission’s (EC) draft directive on the regulation of funds.

The National Association of Pension Funds (NAPF), one of Europe’s most prominent institutional investors, said the directive in its current form would devastate pension schemes across Europe.

NAPF chief executive Joanne Segars said: “The directive, if passed in its current form, will reduce investment choice and mean that the return pension schemes can get for any level of risk will be reduced.”

“Even a small reduction in return will have an impact on the affordability of defined benefit pension schemes,” she added.

The European Federation for Retirement Provision, which lobbies on behalf of pension funds, has also written to the EC asking for changes to the proposals, while the NAPF’s Dutch and Irish counterparts echoed its stance.

The Association of British Insurers (ABI) backed investors’ criticisms, saying it had “concerns about the impact of the proposed directive on investor choice and the costs of compliance which will ultimately have to be born by savers.”

Criticism from investors comes just days after London mayor Boris Johnson called on investors to make their voices heard, rather than leaving it to more vocal hedge fund managers.