Victory for common sense as controversial bonus cap is voted down

03-Jul-2013 @ 13:0

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Anthea McIntyre Anthea McIntyre

Anthea McIntyre Anthea McIntyre

Syed Kamall MEP today (Wednesday) welcomed the decision by the European Parliament to drop a proposed bonus cap for fund managers after months of fraught negotiations between MEPs.

Although such a proposal had been adopted several months ago by the Economic and Monetary Affairs Committee, Dr Kamall worked hard to persuade his colleagues of the inappropriateness of such an initiative for the fund management world.

The bonus cap that was introduced for bankers as part of the Capital Requirements Directive was based on the logic that banks are using their own money to speculate on the markets, and therefore are systemically relevant. Fund managers are investing their clients' money so their interests are already aligned to a far greater extent.

Dr Kamall suggested a compromise which increases investor protection by deferring a big chunk of a manager's bonus as well as making sure investors know what the pay policy of a fund management company is.

He said: "Strengthening the financial system is absolutely vital, but we need to do so without becoming vindictive.

"The bonus cap would not have helped stabilise the financial system. It was always a populist idea that the Left supported because of their hatred of high pay. I have nothing against high pay so long as the person is not being rewarded for failure.

"The bonus cap would have been hugely damaging to the European asset management industry, which looks after the pensions and investments of millions of Europeans. That is why I am very pleased to see that the centre right and liberal groups have seen sense and backed away from this misguided idea."
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