Swedish fund companies cleared to offer savings accounts

Regulatory proposals have been put forward in Sweden that would allow fund manufacturers to also offer tax efficient savings accounts under the regime governing investment savings accounts (investeringssparkonto, ISK).

The proposals have been put forward by an ongoing enquiry making recommendations for the government. The Swedish Investment Fund Association (Fondbolagens förening) has been pushing for this opportunity ever since the savings account regime was launched.

At the time, it was possible for banks and asset managers to offer this type of savings account – which shelters assets in a tax efficient way. For example, capital gains tax is not taken out when funds are sold within the account wrapper. However, the regulations did not allow fund manufacturers to offer this type of account for those who wished to invest directly into a fund. Instead, fund companies were required to refer such customers to a bank or securities institution. The Fund Association said that this created a considerable competitive downside for fund companies in the local fund markets.

The Fund Association noted that the regulations had in practice stopped fund companies from distributing their own funds, to the detriment of market competition. This has had a significant impact on the industry: record low interest rates and changes to tax rules around private pensions means that many long term savers have been attracted to investment savings accounts. The Fund Association estimates that more than half of net new savings in funds went via ISK accounts, while in the segment representing residential household savings into funds, pretty much all new savings went via ISK in the past year.

The proposals to adjust the ISK regime will now go out for consultation ahead of a proposed change in law taking effect by 3 January, 2018.

Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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