LONDON (Reuters) - Blocks to selling mutual and hedge funds across the European Union will be “flushed out” to feed more savings into economic growth, the bloc’s financial services chief said on Thursday.
Asset managers, and alternative investments like hedge funds and venture capital firms, face too many hurdles when doing business outside their home state, European commissioner Jonathan Hill said in a statement.
Under EU rules, funds authorised in one state should have free passage across the 28-country bloc but they often face extra fees, additional checks on marketing literature, and a requirement to maintain an agent to pay refunds locally.
Hill launched a public consultation to help him decide what action to take.
“I want to use this consultation to flush out what the main barriers are to funds operating across borders, so that we can work out how best to overcome them,” he said.
Action taken will depend on how pervasive a barrier was, and how much “hard evidence” the consultation unearths, with heavy-duty legislation likely to be last resort, an EU official said.
Brussels will more likely put pressure on national supervisors who erect the barriers by taking their home state to the bloc’s top court, which has powers to force rule changes and impose fines, the official said.
This would be faster than waiting until 2017 when formal reviews of all the bloc’s mutual fund and hedge fund rules are being done.
Some 80 percent of mutual funds in the 8 trillion euro sector, and 40 percent of funds in the 5 trillion euro alternative funds sector, are sold cross border.
But few funds are sold in more than four or five states.
The European Commission will talk to supervisors who slap the highest fees on non-domestic asset managers and hedge funds.
One-off fees charged on mutual funds range from 115 euros ($130) in Germany, to 1,100 euros in Austria, a separate EU document seen by Reuters showed.
Annual fees vary from 200 euros in Slovakia to more than 4,000 euros in Italy. One-off fees on hedge funds range from 200 euros in Slovenia to 2,520 in Germany.
High fees are putting off smaller asset managers from expanding their business across borders, Hill said.
The Investment Association, a UK funds industry body, welcomed Hill’s “no off-limits” consultation.
“Get this work right and people saving into investments should have easier access to these great products,” said Guy Sears, interim CEO of the IA, whose members manage a large slice of the EU market.
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Reporting by Huw Jones; Editing by Ruth Pitchford