EU fund directive questioned by AIC
The Association of Investment Companies (AIC) has claimed that the European Union’s (EU) plan to reform the hedge fund and private equity industries will increase costs and reduce commercial flexibility in these sectors.
Ian Sayers, the AIC’s acting director general, said that the Alternative Investment Fund Managers (AIFM) Directive would be ’deeply damaging for the investment company sector’ in its current form.
The AIC registered its criticisms of the Directive in a written submission to the House of Lords European Union Committee.
’Policymakers across Europe should stop and take stock of what they are trying to achieve,’ Mr Sayers commented.
’There may be a need for increased regulation for Alternative Investment Funds, but action should be targeted, effective and proportionate.’
Designed to prevent retail investors from putting money into unregulated funds, the Directive has become the subject of major controversy among hedge fund operators and others in the wealth management industry.
The Directive proposes to limit the amount of leverage funds can deploy and requires the use of European-domiciled banks.
’The prime objective behind this draft piece of legislation is the regulation of EU fund managers and therefore the investment funds they manage. However well intended, the imposition of a trade barrier is not a desirable outcome for the non-EU investment fund community,’ said Joe Truelove, head of business development for corporate clients in Guernsey, Kleinwort Benson.
’For this reason, coupled with the reaction from investment management sectors from the UK to the US, it is the belief of many commentators that the Directive is unlikely to come into force in its current form.’
