On 2 June 2016 the European Commission published a consultation document on the cross-border distribution of funds in the EU. The consultation covers the full range of EU funds (UCITS, AIF, ELTIF, EUVECA and EUSEF) and the Commission invites responses by way of an online questionnaire by 2 October 2016.
The consultation has arisen out of the proposal to establish a Capital Markets Union (CMU). One of the key objectives of the CMU is to deepen the single market for financial services and cross-border investment funds will help to achieve this. The Commission is of the view that as a result of the UCITS Directive and AIFMD there should be no restrictions on the sale of such funds throughout the EU. However, in practice there remain barriers to cross-border distribution, most notably regulatory, including “burdensome registration procedures, costly and diverse marketing requirements, inconsistent administrative arrangements and tax obstacles”. The Commission is now carrying out an information-gathering exercise to ascertain how cross-border distribution of funds could be improved. It asks for “specific examples and where possible quantitative and financial evidence of the financial impact of the barriers”. The questions are addressed to asset managers, distributors and investors.
This is a great opportunity for the fund management industry to input to EU policy. The more responses that can be submitted the better as it will help influence the EU’s approach as to how to address the regulatory barriers currently in place around cross-border distribution of funds. This will lead to greater efficiencies for fund managers as funds should become easier to distribute throughout the EU from a time and cost perspective and ultimately it should lead to better outcomes for investors. While the position remains uncertain in light of Brexit, any easing in the regulatory barriers to the cross-border distribution of funds will be advantageous to UK firms intending to keep an EU presence and may ultimately benefit non-EU third country firms in any event.
There is still time to submit a response. If you are unsure how (or indeed whether) to respond or you don’t have the resources internally to produce the response we are able to assist. Please contact Sarah or Karagh to discuss how we can help.