The European Fund and Asset Management Association (EFAMA) has reiterated its firm opposition to centralised supervision of the asset management industry, arguing that proposals floated by the European Commission risk adding unnecessary complexity without improving supervisory outcomes.
In a new report published today – Asset management supervision: why passporting remains the best supervisory model for Europe – EFAMA said the existing system based on the Collective Investment in Transferable Securities (UCITS) and Alternative Investment Fund Managers Directive (AIFMD) passporting regimes continues to serve the sector well and remains the most suitable model for ensuring effective oversight of cross-border managers.
The report responds to the Commission’s Savings & Investments Union (SIU) Action Plan, which committed to exploring centralised supervision for market participants with a significant cross-border presence.
For asset managers, the Commission has been considering three options: supervisory colleges, joint supervisory teams, or direct supervision by the European Securities and Markets Authority (ESMA).
EFAMA argues that none of these models would improve outcomes for investors or supervisors. Instead, it said the changes would create operational inefficiencies, duplicate existing oversight structures and dilute hard-won supervisory expertise in national competent authorities.
Shortcomings
The report identifies three main shortcomings of centralised supervision. First, ESMA lacks the resources and industry-specific knowledge required to oversee large cross-border managers effectively.
Second, shifting management company supervision to the EU level while leaving product supervision at national level would create a “double layer” of oversight.
And third, EFAMA warned that supervisory colleges could slow decision-making because of diverging views among national authorities.
“What would improve asset management supervision, and is desperately required, is simplifying and improving reporting and data sharing across the EU,” the association said.
It called for a single, modular reporting template for UCITS and AIFs and better data-sharing arrangements to strengthen risk-based supervision and reduce the reporting burden on firms.
Vincent Ingham, director of regulatory policy at EFAMA, said: “There is a strong consensus among asset managers – large and small – to preserve a supervisory model that has contributed to building the Single Market for investment funds. Our report clearly shows that increased centralisation of asset management supervision would not lead to better supervisory outcomes, nor would it substantially contribute to the SIU objectives.”
Policy adviser Marin Capelle added that supervisory colleges would only “add complexities without leading to better supervisory outcomes”, urging the Commission to “pause and reflect on the merits of this idea”.
The Commission is expected to present a legislative package at the end of 2025 aimed at further integrating EU capital markets.
EFAMA called on policymakers to prioritise efficient and competitive markets over “complex supervisory constructs with unclear rationales”.
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