The Swedish Investment Fund Association has severely criticised a Twitter campaign launched by the buffer fund AP7 in the wake of new regulations intended to tighten up registration of funds available on the country’s PPM platform, which is operated by the Swedish Pensions Agency.
The new regulations came into effect on 1 November, following consultation and a number of scandals that saw long term savers being subject to alleged fraud – for example, by funds registered on the platform moving investors’ money out of the country which has then disappeared.
The result has been tighter rules for those funds that wish to remain on the platform, including re-registration fees for all funds, and rules that mean funds that have not been available for a minimum amount of time, or that derive the majority of their inflows via PPM will be banned.
AP7 is the default fund for those who do not wish to select funds themselves using the portion of mandated pension savings that are allocated to PPM. Its Twitter campaign, Sifa suggests, highlights the fact that while Parliament has drawn up law that requires improved consumer protection and the Pensions Agency has sharpened requirements for players on its platform, AP7 is not encompassed by these new requirements.
Hej oseriösa fondbolag. Det här är till dig. #hejdåblåsare
— AP7se (@AP7se) October 31, 2018
“New requirements for minimum managed capital of SEK500m and a management history that go back three years stops all small and new funds, good and bad,” notes Fredrik Nordström, CEO of Sifa.
“With the hard interpretation of the rules that the Pensions Agency has indicated that they wish to implement AP7 would not have qualified for the fund supermarket either – after the significant changes that the Agency has made in its own management through the years. AP7’s management is not unserious, but the same cannot be said about the campaign the the Agency is now pushing. Through its actions, the Agency undermines ongoing trust in what is a Parlimentary mandated pension system and the private players that have been invited in to sign new agreements and cooperate with the Pensions Agency. Thereto it creates uncertainty for the savers who have selected funds that now do not meet the new criteria”
The Fund Association’s view is that competition is required to ensure that investors and long term savers have access to good funds. It adds that AP7 does well from having competitors, which means it has to improve its own offering, which is something that has happened over the years. AP7 ought to use its resources to ensure that it describes its offering, instead of spending money on spreading a picture of investors who have selected small and newly started funds having been subject to fraud, the Association’s CEO adds.