EUROPE - Asset manager APG has called on the European Commission to temporarily withdraw its draft proposals for the Alternative Investment Fund Managers (AIFM) Directive and to produce a "more balanced proposal by the summer", in light of the large number of expected amendments.

Speaking at a hearing earlier this week on the AIFM Directive held by the European Parliament's Economic and Monetary Affairs Committee (ECON), Gerben Everts, head of the global regulations and compliance team at the Dutch asset manager, told MEPs that the draft directive is a "disproportional proposal" and the negative consequences will outweigh the positive ones.

APG has not actively lobbied against the directive in Brussels, however Everts said it had joined with other pension funds and asset managers working for pension funds to send a letter to all European institutions outlining its views on the directive.

Everts told the committee that if the proposal is left unchanged "it will lead to artificial organisational structures - moving asset managers and institutional investors outside Europe. With the extraterritorial reach currently included in the proposal, investors are not served".

Dutch asset managers for pension funds estimate that approximately 22% of the €450bn of assets under management are managed by non-EU, non -UCITS counterparties. So Everts argued if APG or other managers were restricted when selecting external managers or saw restrictions which impacted their investment strategy "this would hamper optimal portfolio construction for institutional investors".

"It will lead to higher costs and lower returns. The many millions of European citizens who have a financial interest in this issue via their pension funds could, in our view, be adversely affected by the proposal," warned Everts.

In the speech to the committee, Everts also criticised the lack of consultation and transparency in developing the directive, arguing that in earlier reports the European Parliament had focused predominantly on the regulation of hedge funds.

"The extension to all investment fund managers by the Commission hit us by surprise,  said Everts. "We never considered ourselves to be the addressee of these initiatives and now we as institutional investors face the consequences".

Everts urged the committee and parliament to adhere to the European 'better regulation' programme and warned while the directive is a "very important and necessary piece of regulation" it should be clear to everyone what is and is not allowed and loopholes must be prevented through avoiding "multi-interpretable clauses".

"Parliament needs to be realistic," continued Everts. "In my view, the quality of the Directive will seriously benefit if Parliament were to invite the Commission to temporarily withdraw its proposal in the light of the many amendments called for and to come forward with a new, more balanced proposal by the summer."

This would then allow for further impact assessments and broad consultation on the issues, as Everts said: "A redrafted proposal will serve the level-playing field and prevent loopholes. A temporary withdrawal will facilitate the buy-in of the financial sector, while the momentum will not be lost."

The draft directive was originally scheduled by officials to receive approval by the end of 2009. However, a recent working document on the proposal - prepared by Jean-Paul Gauzès, the rapporteur for the directive - has now outlined a proposed timetable for the regulatory process to be extended to July 2010.

Under the projected timetable, published in September, the presentation of a draft report is scheduled for early December, with a deadline for tabling amendments set for mid January. It is then estimated the ECON committee will vote on the proposal in April, followed by a plenary vote in July 2010.

APG is the wholly-owned asset manager of ABP, the €180bn pension fund for civil servants.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com