EUROPE – EFAMA, the European Fund and Asset Management Association, has called on the European Commission to remove legal and regulatory barriers of the UCITS Directive.

The call follows a report last week by the Commission’s Expert Group on the efficiency of the European fund industry, and the need to modify the current UCITS Directive.

According to the report, the UCITS framework’s unnecessarily onerous requirements and inadequate organisational flexibility are holding the European fund industry back.

The group added that slight modifications to the legislative framework were necessary to allow the fund industry to evolve. However, none would involve tampering with core features of the directive.

Recommendations included reducing administrative delays in getting investment funds to the market, enabling the rapid and efficient merger of funds, allowing the pooled management of assets owned by different funds, breathing life into the management company passport, and providing more freedoms for the depository.

According to EFAMA, “It is now up to the Commission to put the Expert Group’s proposals into effect.”

Association president Stefan Bichsel added that EFAMA welcomed the expert group’s practical solutions for removing existing legal and regulatory inefficiencies and barriers without touching the core principles of the UCITS Directive particularly with regard to investor protection.

“In view of the degree of urgency, we would like to remind the Commission and the Committee of European Securities Regulators (CESR) that a number of improvements could even be achieved without having to resort to a modification of the Directive.”

EFAMA has also supported the group’s opinion that transforming the UCITS Directive into a full Lamfalussy-style Directive can also be undertaken in a separate step.

However, if an agreement could be reached in this way, a comprehensive view of the Directive should at least be considered in order to develop an efficient regulatory framework for investment funds, said EFAMA.

However, it added it was “evident” that a modification of the directive cannot solve all problems.

According to a statement, a number of tax issues remain to be solved if fund mergers are to work. Furthermore, EFAMA’s main objective regarding regulation is the realization of a true single market for investment management.

“A level playing field for all savings and investment products requires a cross-sectoral approach. The fact that this approach has not been taken so far is a major obstacle for achieving this goal,” said the association in a statement.

However, it added: “Despite the problems that remain to be solved, EFAMA is convinced that the European Commission will do its best to move forward in the direction mapped out by the expert groups.”

The European Commission has organised an open hearing on the views of the Group in Brussels on July 19.

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