The European Parliament has ditched its plans to impose a bonus cap on European fund managers.
On the back of the broader Ucits V framework, the proposed pay rules, which would ban bonuses bigger than salaries, would have also forced fund managers to put half of their bonuses in their own funds.
The narrow rejection, by 348 votes to 341, according to the Telegraph, was welcomed by New City Initiative (NCI) board member Dominic Johnson (pictured), CEO and founding partner of Somerset Capital Management.
‘I'm delighted that what I thought were fundamentally inappropriate, sledgehammer measures have now been put to one side,’ he said. ‘[The fact that] Members of the European Parliament (MEPs) collectively think that the rules were not appropriate for the industry shows a good engagement with the European politicians and the financial services sector.’
Johnson said that he was ‘impressed’ with the level of engagement with British MEP, Dr Syed Kamall.
‘He was wonderful at helping explaining the processes and listening to the arguments. In fact, the British government generally were very supportive of making sure that our case was clearly made.’
However, reforms in the industry are still needed, he added. ‘The message from the NCI is that we still need reforms on about cultural change, alignment of interest, performance fee structures and transparency.’
The NCI, which is comprised of 42 independent asset management firms, has been closely working with the Investment management Association (IMA) on drafting a code of conduct for the industry which, Johnson believes, will benefit both fund managers and investors.