New legislation in the new year – how fund saving is affected

Legislative changes designed to improve conditions for fund saving in Sweden come into force on 1 January 2018. The changes will, amongst other things, introduce more transparent pricing models, offer the opportunity to save directly in ISK via your fund management company, and facilitate saving in sustainable funds through clear information. 

These are all issues that have been on the Swedish Investment Fund Association’s agenda for some time now, and the Association’s working groups have been working hard on practical implementation issues throughout the autumn.

“One of the important tasks of the Swedish Investment Fund Association is to promote good conditions for fund saving. More people save in funds in Sweden than in any other country in the world, so it is of great importance that we have a modern and efficient regulatory system for funds. The rules now being introduced will strengthen consumers’ position in the fund market and help ensure increased transparency and comparability for funds, and we are consequently very much in favour of the legislative changes that will take place in January 2018,” says Helene Wall, General Counsel at the Swedish Investment Fund Association.

See below for some of the concrete results of the legislative changes:

• Allowing funds to offer customised unit classes for different sales channels will enable new pricing models. Many funds will create unit classes with lower fund charges, and it will be easier to see where your fund charges are going. Changes to the regulation that apply from the new year will make it clear whether the fund management companies pay commissions or make other payments to advisers, fund marketplaces, and other fund retailers. Rules will also be put in place governing totally independent advisors and portfolio managers who only take payments from customers. The new fund legislation takes these changes in the market into account by enabling fund management companies to customise fund unit classes for different sales channels. And as a result, fund savers will see the launch of new fund pricing models whereby they pay separately for advice or portfolio management, for example, while benefiting from lower fund charges.  
• Fund savers can invest directly in investment savings accounts (ISK) with fund management companies.  Fund management companies will, as of the new year, be able to offer their customer an ISK when they save in funds – something that has previously been the exclusive preserve of banks and securities companies. This change will both improve the competitive climate and mean a greater range of ISK-based fund saving for savers. ISK is a tax-effective method of saving and the majority of new savings in funds in recent years have been via ISK, which aim to simplify and encourage saving and to increase competition when it comes to savings products, e.g. by allowing people to switch funds without incurring tax penalties.
• Sustainability information for every fund. Every fund must provide details of how issues such as the environment, social concerns, labour practices, respect for human rights, and anti-corruption work affect the fund’s management work. The information must be included in the funds’ full prospectuses and annual reports. The Swedish Investment Fund Association has, in response to the new legislative requirement, drawn up a new industry standard for the way in which the sustainability information is provided, ensuring that fund savers are able to compare the information from different funds.

For further information, contact:

Helene Wall, General Counsel, the Swedish Investment Fund Association
+46 8 506 988 02/+46 70 6244305 / helene.wall@fondbolagen.se

Eva Reimers, Head of Communications, the Swedish Investment Fund Association
+46 8 506 988 06 / +46 70 644 31 70 / eva.reimers@fondbolagen.se

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