EU policymakers have agreed a deal on pay in the asset management industry which includes a requirement that fund managers be paid half of any bonuses in units of their own funds.
The new rules also mean fund managers must defer 40% of any bonuses for at least three years, or 60% if bonuses are particularly high.
The new rules are set to become law in 2016 and follow negotiations between regulators and trade bodies across Europe.
For years, critics of the fund management industry have argued managers' interests must be more closely aligned with their investors. Although many UK-based fund managers invest in their own funds, the new rules will ensure this takes place across the €6.3trn European fund management industry.
"We want to ensure that responsible remuneration policies are in place across the financial sector and that there are no loopholes for risky and dangerous trading practices," lawmaker Arlene McCarthy was quoted as saying by Reuters.
"The new rules will bring funds in line with EU bankers bonus rules, as there will be no guaranteed bonuses for fund managers and 40% of bonuses must be deferred."
Who is affected?
Member states have up to 18 months to introduce the law once it is formally signed off - something which is likely in the next few weeks.
European regulators now have to decide exactly which staff at mutual funds should be covered by the rules, a process which could lead to stricter and wider restrictions on pay across the sector.
In a move to head off potential repeats of the Madoff scandal which cost investors £10bn, the new rules also introduce stricter sanctions for depositories which oversee assets held in funds.
Any fund breaking the rules will face fines of up to 10% of turnover.
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