​Swedish FTN challenge delays €18bn equities award to global asset managers

Sweden’s Fund Selection Agency (FTN) says a domestic fund manager’s new bid to involve the EU in an ongoing legal challenge may further delay implementation of its biggest procurement for the premium pension system’s €140bn funds platform.

The FTN, or Fondtorgsnämnden, is in a multi-year process of procuring a new, slimmed-down set of funds from investment managers for the first-pillar Premium Pension DC system.

Indecap Fonder, a Stockholm-based fund manager owned by Swedish savings banks, was the second-largest provider of funds in the actively managed global equity category before the reform, with SEK35bn (€3.2bn) invested in its Indecap Guide 2 C fund.

But when it failed to win one of the 12 new mandates awarded in February by the FTN for that SEK200bn (€18bn) segment of the platform earlier this year, Indecap launched a legal bid for a judicial review of the process, making numerous criticisms about the way the procurement had been carried out.

This followed FTN’s award of active global equity mandates in February to international managers including Columbia Threadneedle, Fidelity, JP Morgan Asset Management, Jupiter, and Schroders − alongside Swedish stalwarts such as AMF Fonder, Carnegie and Swedbank Robur Fonder.

Since the initial application Indecap Fonder filed on 6 March in the Administrative Court in Stockholm for a judicial review of the FTN’s procurement process, Indecap has now come back with further legal arguments.

In its most recent filing on 10 July, Indecap sought a preliminary ruling from the EU’s Court of Justice to clarify whether the procurement should have been carried out in accordance with the EU rules on service concessions rather than the regulatory framework the FTN in fact applied.

“As this issue has never previously been examined in this type of procurement, it is reasonable for the Court of Justice of the European Union to provide guidance before a Swedish court decides the case,” Indecap said in a statement.

The case has already caused a six-month delay in the transfer of premium pension savings from the old set of providers to the smaller, more international set of procured fund managers.

Asked about Indecap Fonder’s latest filing, a spokesman for the FTN told IPE: “As regards timing, it is correct that additional arguments and requests, including a possible request for a preliminary ruling from the Court of Justice of the European Union, may prolong the proceedings. 

“Each extension of the process means that pension savers will have to wait longer to benefit from the procured funds with lower fees and high quality requirements,” he said.

The agency noted Indecap was now raising arguments concerning the legal framework for the procurement of funds to the premium pension fund platform, he said, including the Swedish Act on the Procurement of Funds for the Premium Pension Fund Platform (2022:760), which was adopted by the Swedish Parliament in 2022.

“As a government agency, FTN’s role is to apply the legislation in force, not to take a political position on the design of that legislation,” he said.

“Our assessment remains that the procurement has been carried out in accordance with the applicable legal framework,” he said, adding that the Tumba-based agency would respond to Indecap’s arguments within the legal process.