Experts lend weight to criticism of EC directive

Industry groups and experts continue to speak out against the European Commission's proposed alternative investment directive, arguing it would place an unfair burden on Europe’s private equity industry.

The European Commission's Directive on Alternative Investment Fund Managers would bring about unduly harsh regulation of European private equity, according to three regulatory experts.

Jacques de Larosiere, a veteran French civil servant and author of an EU report on financial regulation, said last week that “private equity should be kept out of heavy regulation”.

Meanwhile, Sir James Sassoon, who recently examined financial regulatory reform on behalf of Conservative party shadow chancellor George Osborne, said: “It is hard to find a kind word to say about a directive so disproportionate in scope, so protectionist in its effect and so poorly drafted”.

Dan Waters, responsible for overall strategy and liaison with the asset management sector at regulatory body the Financial Services Authority, criticised “the myriad detailed impacts of the sweeping scope of this directive”.

The British Private Equity and Venture Capital Association has welcomed the comments and echoed last week's industry response to the directive from the European Private Equity and Venture Capital Association.

According to BVCA chief executive Simon Walker, the EVCA report “lays out in stark detail and detailed terms the inadequacies of the proposed directive and the harm that it would do to private equity houses, the many portfolio companies under their control and ultimately the employees and customers of those companies”.

In the same statement, the BVCA says Sweden, which assumes the EU presidency and leadership of the European Council this Wednesday, “has the chance to recast this directive radically and we urge them to seize that opportunity”.