IMA calls for 'contractual fund' regime for UK

The IMA is calling for the introduction of a new type of fund structure it says will send out a “strong signal” the UK is serious about providing cross-border funds, ahead of the introduction of the new UCITs IV Directive.

In its representations for the 2010 Budget, the association says a tax-transparent ‘contractual' fund regime would help ensure the UK asset management industry is in a strong position to attract new business.

The IMA says its call comes in anticipation of ‘master-feeder' structures, which it expects will be introduced as an alternative to merging fund ranges under UCITs IV.

It says 'contractual' funds represent the most efficient structures for the ‘master' fund.

IMA chief executive Richard Saunders says a contractual regime would allow the UK to compete effectively when UCITs IV comes into force.

"It would give out a strong signal that the UK is serious about providing cross border funds - and would deter business from going to other EU countries," he says.

The IMA is also proposing the abolition of stamp duty on UK funds, saying it "cuts against the principle" of an equal EU marketplace and acts as a disincentive to continental European investors.

The headline duty rate of 0.5% appears onerous, it says, but the cost per annum in practice is about five basis points.

"Its complexity and apparent expense make it less attractive to invest in UK funds than in those from other member countries," Saunders says.

"Abolition would stem further outflows and could bring in increased business and tax revenues."