The European Parliament has rejected proposals to ban fund managers from receiving bonuses amounting to more than their annual salary amid warnings the plan could backfire by harming pensions and savings, reports Bloomberg.
The proposal was defeated by the lawmakers in Strasbourg, France after some legislators argued that the measure would drive up fixed costs for asset managers and curtail returns. The proposed curbs were blocked by a margin of seven votes out of 695 cast.
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Syed Kamall, a UK Conservative legislator who opposed the pay limit, said: "Strengthening the financial system is absolutely vital, but we need to do so without becoming vindictive.
"The bonus cap would have been hugely damaging to the European asset management industry, which looks after the pensions and investments of millions of Europeans."
The draft rules for UCITS, or Undertakings for Collective Investment in Transferable Securities, fund managers would have gone beyond planned EU limits on banker pay that will allow bonuses of twice fixed salary.
European asset-management firms were concerned the proposal, which would have affected two-thirds of senior fund managers, would have led to a bidding war for top traders, increasing fixed costs and making the industry more vulnerable to market downturns.
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