The Spanish economics ministry has announced plans to increase the powers of the control committees of Spanish qualified pension plans by allowing them to directly award a second mandate for up to 20% of assets to an EU based money manager.

Until now, the control committees (boards) have only been able to appoint one administrator/manager known as a gestora, which, under various insurance regulations, had to have a domestically registered office in Spain.

Funds were able to award foreign mandates in practice but its required the gestora to award a 'sub-mandate' to a foreign manager, leaving the Control Committee with only indirect control.

Commencing on the significance of the proposed change, Ian Hinton of Madrid consultancy Aserplan, says: I think this will change things in practice. Most of the gestora have been in the business not to do the administration which they have to so as well but to manage the assets. They have been reluctant to give up any part of that."

In disputes between committee and gestora, the control committee has only had recourse to the ultimate sanction of changing manager altogether or accepting the autonomy of the gestora.

"In practice the control committees have to go down an indirect route to get a specialist manager appointed."

There is, as yet no timetable for change, but a draft has been circulated by the insurance regulator amongst pension funds for some months. Hinton believes that in practice the change will require an amendment to the 1987 law, with further regulations supplied by the insurance regulator.

He does not believe that the new law will prove in any way restrictive in that besides awarding 20% in a second mandate, the control committee should still be able to get its gestora to award a further 'sub-mandate'.

"It should have some big implications for the multi-national investment managers who want to get into the Spanish market. They will be able to get hold of some assets without having to be registered here." John Lappin"