Support from industry for all but one of proposals to amend PPM platform rules
Proposals for an automatic suspension of sales of any fund on Sweden’s PPM platform where assets exceed those gathered ex-platform has been rejected by the Swedish Investment Fund Association.
This is one of some 30 proposals put forward by the platform’s operator the Swedish Pensions Agency, which was tasked by the government with developing new rules to increase investor protection and improve the quality of funds available, following a scandal involving funds ported onto the platform using EU regulations, but which left investors out of pocket (see below).
The Investment Fund Association said it supported all the other proposals in principle, because its members feel that only serious players in the industry should have access to the platform through which a portion of compulsory long term savings (pensions) are directed and which facilitates self-selection of funds by those working and paying taxes in Sweden.
Association chief executive Fredrik Nordström said that the proposal rejected by his trade body would, if adopted, mean that some of the best and most popular funds would be closed to future investments.
“That would blindly hit funds that are being managed well today and that have both lower fees and better returns than the average. That would be the opposite to strengthening consumer protection,” he said.
Elsewise, the proposals put forward by the Pensions Agency include banning telephone sales of funds on the PPM platform, a requirement for a minimum of three years of history for both the fund and the fund company, and a ceiling on the share of the fund’s capital that is represented by PPM investments.
The Agency has proposed a minimum level of fund assets of SEK500m (€51m) before a fund be allowed to list on the platform, and the development of an advisory board, including representatives of the fund industry, to tackle questions around PPM.
The future of the PPM platform has been queried since news broke over the past year of problems with authorised and regulated fund providers and their funds.
This has taken Swedish economic crime investigators to Malta as part of the ongoing investigation into how assets were handled by Falcon Funds Sicav plc – the Pensions Agency announced in October 2016 that it had made a complaint to the Swedish Economic Crime Authority, and the Malta FSA in January 2017 announced that it had appointed a competent person to oversee the liquidation of Falcon’s three funds affected. At the time, the Pensions Agency said that SEK1bn (€102m) of investors’ money was still missing.
It also follows guidance from Sweden’s courts as to the limits or not of the Pensions Agency’s authority in stopping the listing of funds on the PPM platform and trading in shares of funds that might already be on the platform. This came after the Pensions Agency stopped trading in funds of Allra; the fund provider sought to overturn the decision via the courts, but pending a decision by a higher court, it was announced on 5 May that Ålandsbanken would take over the management of Allra’s funds, before initiating a controlled transfer of assets to its own funds. Ålandsbanken said the takeover was partly based on its experience of jumping in to take over assets of former Icelandic financial institution Kaupthing’s Swedish arm Kaupthing Sverige in 2009, after the group collapsed during the global financial crisis.