Conservative negotiator vows to resist "misdirected" proposals on fund-manager bonuses

21-Mar-2013 @ 13:0

Syed Kamall Syed Kamall

Anthea McIntyre Anthea McIntyre

Anthea McIntyre Anthea McIntyre

The European Parliament's Economic and Monetary AffairsCommittee today approved by a small majority plans to cap the bonuses earned byinvestment fund managers.

The proposal - which follows a similar ruling on bankersbonuses - would cap bonuses at 100 per cent of salary and will now be debated bythe Parliament as a whole. But Syed Kamall, Conservative negotiator on thelegislation, vowed that he would continue to argue against the proposal andhighlight its shortcomings for investors.

He said: "While it might seem politically attractive tointroduce bonus caps for fund managers, it is a wholly inappropriate initiativeand legally unsound..

"It is vital that member states resist this hugely damaginginitiative which will be bad for investors and for transparency. It will notimprove financial stability and I question its legal basis since the EU isprohibited from regulating member-state salaries.

"Capping bonuses in the area of fund management would onlyraise base salaries - and that is likely to increase costs to investors. Highersalaries would also distort competition and act as a barrier to entry, as smallfirms would struggle to compete for staff.

"It would mean weaker incentives for good performance.What's more, there is a strong argument that transparency would be weakened asmanagers could potentially work out backdoor ways to bolsterremuneration.

"We want to make sure that remuneration policies are open,encourage best practice and only reward success. The cap may sound like a goodidea on face value, but the reality is far more complicated and has not beenproperly thought through in the best interests of investors."

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