On 25 February 2014, the European Parliament published a press release announcing that it has reached political agreement with the Council of the EU on the proposed UCITS V Directive. The press release highlighted that:
- Remuneration. The proposed remuneration requirements will require that at least half of fund managers' variable remuneration must be paid in the assets of the UCITS, unless the management of UCITS accounts for less than half of the total portfolio. Payment of at least 40% of variable remuneration will also be required to be deferred for at least three years. ESMA will issue guidelines on the persons to whom the remuneration requirements apply.
- Depositaries. A single depositary (credit institution or authorised legal entity with a proper amount of own funds) must be appointed to oversee investor payments and act as custodian. A management company should not act as both a management company and depositary. Depositaries will be required to keep investors' money clearly separate from their own assets. They will also be barred from investing these funds on their own account and may be deemed liable for any loss of assets, even where they delegate custody of them to a third party.Sanctions. Member states will be required to provide harmonised administrative penalties which will include suspension of authorisation and a temporary or permanent ban from fund management, fines of up to 10% of annual turnover or €5 million and individuals up to €2 million. The amount of the fine should be up to twice the amount of profits made.
The next step will be Parliament and Council adopting UCITS V at first reading.