A regulatory framework adopted by the European Community in the '80s has helped develop the fund industry in the European Union's member states, but these days it's holding companies back. That's the message elaborated in a report solicited by the European Commission and delivered this week, reported Investment and Pensions Europe.

The Community intended the "Undertakings for Collective Investments in Transferable Securities," or UCITS, directives to allow distribution of funds across borders by laying out requirements for products to receive Europe-wide "passports." But as demand for investment products has grown in Europe, the "unnecessarily onerous requirements and inadequate organizational flexibility" of UCITS has brought "reduced investor choice, untapped economies of scale, unexploited specialization benefits and higher costs," wrote the Expert Group on Investment Fund Market Efficiency, established by the Commission.

Scale and cost were among the chief issues that European CEOs cited as problematic in a roundtable at the DFIA/NICSA conference in Ireland. The Expert Group called for "prompt and focused" modifications to the legislative framework to make it more relevant to today's market, including reducing administrative delays and making fund mergers simpler. The recommendations will be reviewed July 19 in Brussels.

“What is required now is a sense of urgency," wrote the authors. "Valuable time has already been lost, as some of these issues have been debated for the past several years."  

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