EU executive targets harmonising marketing, fees in 8 trln euro funds sector

* EU aims to lift barriers to cross-border sales of funds

* Wants to target extra fees, rules imposed by states

* Additional fees mean charges higher than in U.S (Other OTC: UBGXF - news) .

* EU officials will discuss proposals next month

By Huw Jones

LONDON, May 27 (Reuters) - Action to lift barriers on cross-border sales of investment funds in the European Union should focus on tackling the extra fees and marketing rules that national regulators impose, the European Commission says in a document seen by Reuters.

The EU is creating a "capital markets union" to channel more money from savings into the economy, such as by making it easier to tap the bloc's 8 trillion euro ($9 trln) mutual funds sector.

While the EU's "UCITS" mutual funds law allows authorised asset managers to offer their funds across the 28-country bloc, they often face additional regulatory fees outside their home state.

The result is a fragmented sector that ends up charging higher fees than in the United States.

National regulators also impose extra marketing rules and other administrative requirements on funds from other states, according to the document, which was written by the European Commission, the EU's executive body.

"One obstacle that has been consistently reported is regulatory barriers to distribution," the Commission said in the document, which officials from EU member states will discuss next month.

While 80 percent of funds registered in the EU are offered cross-border, a third are only offered in one other state, with another third only sold in up to four countries.

Limited cross-border sales means that the average size of the 30,000 funds in the EU is 200,000 euros, seven times smaller than a typical U.S. fund.

Asset managers find it costly to research all the different marketing and consumer protection rules in each EU country, the document said.

Fees imposed by national regulators vary between 200 euros and 2,000 euros, a funds industry official said.

Such barriers should be tackled as a "matter of priority", the Commission said in the document. It (Other OTC: ITGL - news) said it would issue a public consultation on the main barriers to cross-border sales of mutual funds as soon as this month.

The EU executive has powers to propose laws but one of its officials has said there won't be a major legislative reform in the sector.

Instead, it is looking at practical solutions and raises the possibility of more centralised supervision, such as the bloc's securities watchdog, ESMA, "developing, implementing and running a more consistent regime for marketing".

"A harmonised approach across the board would totally make sense. Ideally we want to just deal with one regulator," the funds industry official said.

However, he said national regulators, who authorise funds which then have a "passport" to market themselves across the EU, would probably resist giving up supervisory powers to ESMA. ($1 = 0.8952 euros) (Reporting by Huw Jones; Editing by Susan Fenton)