Twenty fund managers in Europe have written to EU commissioner Michel Barnier warning that the introduction of the Alternative Investment Fund Managers Directive (AIFMD) in its present form would have unintended damaging effects, such as increased costs for investors.
The fund managers’ letter states: “We are extremely concerned that the AIFMD standards will undermine the single market. We do not believe that such an outcome was intended by policymakers and fear the adverse consequences for European fund investors.”
The AIFMD will overhaul the pan-European regulatory regime applicable to the managers of hedge funds, real estate funds, private equity and other collective investment schemes that include alternative investments. It is due to begin coming into force on 22 July 2013, by which time all EU member states must have transposed the requirements of the Directive into local law.
A draft of the proposed new standards was leaked in April, and drew criticisms from the major banks, hedge funds and private equity fund managers that the rules were unworkable, extended beyond the European Commission’s (EC) mandate and would increase costs for investors.
It was also claimed the draft reneged on a number of the compromises that were fought for and subsequently introduced in the 2011 AIFMD draft.
In their letter to Barnier, fund managers express concern that the latest draft has added rules which make it illegal for parent investment companies to delegate work to staff in other countries, regardless of whether they are EU members or not. They believe that this would mean a firm would have to base either its investment or compliance teams out of their home office.
The EU intends to introduce a final version of the AIFMD rules in September 2012. Expect much more lobbying and debate until then.
By Neil Ainger