Sweden’s investment funds’ lobby has criticised the first tender launched by the Swedish Fund Selection Agency (Fondtorgsnämnden, FTN) for investment options to be offered on the new premium-pension platform, saying its requirements could distort competition by keeping smaller funds out.
Fredrik Nordström, chief executive officer of the Swedish Investment Funds Association (Fondbolagens förening), said: “We are keen that the premium pension system should maintain a high quality and that the premium pension savers should be offered the best funds.
“However, this presupposes that unnecessarily burdensome procurement material does not limit the possibility for different types of fund companies to submit competitive tenders,” he said in a statement published on Friday afternoon.
“The requirements in the procurement should not unnecessarily discriminate against smaller fund companies whose funds can meet the goals for the premium pension and contribute to freedom of choice for pension savers,” Nordström said.
The previous Friday, 30 June, the FTN made the long-awaited announcement of its first tender – for the procurement of actively-managed European equity funds.
But the funds association said in its statement on 7 July that now the final procurement material had officially been published, “it is clear that several important views that the industry put forward during the referral procedure were left without action by FTN”.
It admitted that compared with the previous draft, the published procurement material had been clarified in essential respects, with a number of “material deficiencies” having been remedied.
However, it also said that what had now been officially published contained several mandatory requirements that risked “distorting competition and unnecessarily limiting the FTN’s chances of getting tenders for high-quality funds that would be in demand by premium pension savers”.
It was still questionable whether the procurement documents, and the procurement process described in them, lived up to the basic EU legal principles of, inter alia, equal treatment, transparency and proportionality – principles, the association said, to which the procurement of funds for the premium pension fund marketplace was legally bound.
“The principle of equal treatment means that all fund managers must be treated equally and given equal conditions,” the lobby group said.
“The association believes that that principle is not upheld in the special oral procedure described and where, among other things, some tenderers are allowed to adjust their tenders,” it said.
Meanwhile, it said, the principle of proportionality meant the requirements and questions asked in the documentation had to be both appropriate and necessary to achieve the purpose of the procurement.
Several of the demands and questions in the tender documentation did not meet the requirements of proportionality, though, and this restricted competition unnecessarily, the association said.
“This primarily applies to a number of mandatory requirements that have no necessary or sufficient connection to the quality of the funds,” it said, singling out the requirement for bidders to have at least SEK5bn (€421m) in managed capital.
That stipulation was particularly remarkable, the association said, because it had been clear from preparatory work for the new law that the old capital requirements had been removed to promote tenders from smaller and newly-established players too.
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