The first funds provider to lose out in Sweden’s ongoing reform of the premium pension system’s private funds platform has doubled down on its legal bid for a judicial review of the process, putting new arguments to the court weighing the case.
Indecap Fonder, which was not among the 12 winners in the Swedish Fund Selection Agency’s (Fondtorgsnämnden, FTN) SEK200bn (€18.4bn) procurement for global equity funds on 24 February, said this morning it has now submitted its response to the Administrative Court in Stockholm following the FTN’s statement on 23 March — itself a response to Indecap’s initial objections.
The court is to decide whether to initiate a judicial review concerning the procurement.
Indecap Fonder, which is owned by 32 Swedish savings banks and is the second largest provider of privately managed funds in the global equity category ahead of the procurement results being implemented, said in its latest statement to the court that it “further develops its legal arguments and highlights new weaknesses in the procurement”.
Mats Lagerqvist, the firm’s chief executive officer, said: “This is about whether the system works as intended, not about an individual company or Indecap’s bid.”
Substantial amounts of savings money would leave the Swedish equity market as a result of the structure of the procurement, his firm said, building on an argument levelled in its initial complaints made at the beginning of March.
“When capital of this magnitude is redirected, it affects not only individual savers but also how capital is allocated in the economy as a whole,” Lagerqvist said.
“The fact that tens of billions are being moved away from the Swedish equity market is a significant consequence of the procurement that needs to be highlighted,” he said.
In its latest statement to the court – which has not yet been made available publicly – Indecap said it pointed to several deficiencies in how the procurement had been conducted, claiming bids had been approved despite not meeting mandatory requirements, both in terms of investment objectives and basic formal requirements.
It also asserted that certain parts of the process had been “handled in a way that raises questions about which legal entity actually participated in the procurement”.
The Stockholm-based firm claimed that, furthermore, similar bids from the same tender had been assessed differently, despite essentially identical requirements and bid responses.
“Taken together, Indecap argues that the procurement has been characterised by deficiencies in the principle of equal treatment and a lack of consistency in the application of the regulatory framework,” it said.
Asked to comment on Indecap’s latest statement to the court, a spokesman for the FTN said the agency had not yet received any formal communication from the court and was awaiting its handling of the case.
“Once we have access to the material and the arguments put forward there, we will respond within the framework of the legal process,” he said.
Erik Fransson, FTN executive director, said the application for judicial review had been supplemented with new grounds and facts on several occasions.
“When a claim is successively expanded in this way, there is a risk that the process will be prolonged before the court can reach a decision,” he said.
“Each extension of the process means that pension savers have to wait longer to benefit from the procured funds with lower fees and high-quality requirements, which we regard as unfortunate for both the savers and the public pension system,” Fransson said.
While the legal case remains active, Indecap Fonder – whose Indecap Guide 2 C fund held SEK35bn of premium pension savings at the end of February – remains a provider of global equity funds in the system.
Asked by IPE about Lagerqvist’s assertion that “tens of billions” were being moved away from the Swedish equity market as a result of the procurement, the FTN spokesman confirmed that the fund Indecap Guide had more than SEK10bn invested in Swedish equities – and that when the procurement took legal effect all premium pension funds would be withdrawn from that fund and reallocated to other funds.
