EUROPE - Moves by the French government to change the Alternative Investment Fund Management (AIFM) directive are jeopardising the new regulation and could render it meaningless, Hewitt has warned.
According to reports in the Times of London today, French finance minister Christine Lagarde was expected to recommend changes to directive that would see minimum national standards introduced that each country could apply independently.
The revisions would do away with the proposed 'passport' model, which would allow a fund, once cleared, to trade and be based in any country in the European Union.
However, Leonardo Sforza, head of EU affairs and research at Hewitt Associates, warned that this could undermine the directive as a whole.
"Minimum national specific standards could jeopardise and make meaningless the pan-European regulatory framework the AIFM directive aims to put in place," he said.
"Moreover, such approach would undermine the transparency and predictability of the legal system in the implementation phase - that is the most crucial part of the EU law-making process for market players."
This is not the first time the directive has been criticised, with Andrew Baker, chief executive of the Alternative Investment Management Association, previously warning that any legislation not carefully drafted could damage the German Spezialfond market.
The proposed amendment comes at the last minute, with reports previously suggesting negotiations were coming to a close.