After Madoff, EU unveils tougher rules for funds STRASBOURG, France (Reuters) - The European Commission called on Tuesday for stronger consumer protection, proposing tightening controls and more transparency on investment and savings funds. The proposed changes are motivated in part by the case of U.S. swindler Bernard Madoff, who is serving a prison sentence for his multibillion-dollar Ponzi scheme, which hit investors in both the United States and Europe. "Savings and investment products should be comprehensible," Michel Barnier, the European Commissioner in charge of financial regulation, told reporters. "We want to ensure that these products are safe, that people's investments are safe," he said at the European Parliament in Strasbourg. One of the key proposed changes is tougher rules for investment funds that can be sold across Europe, known as UCITS, with an eye to safeguarding the cash within. The new code aims to prevent a repeat of the situation that allowed Madoff to take custody of the funds although he was also responsible for investing the money. This allowed the scale of the fraud to go undetected for a long time. The European Union's executive wants to separate these two functions - that of the fund manager and the trustee, who is in charge of monitoring the work of the manager and safeguarding the funds. In future, only financially sound banks and investment firms, which are subjected to supervision, will be allowed to take on the role of trustee. Even if they pass this task of safe keeping on to another custodian, they remain strictly liable. Barnier is also proposing separate controls on pay policy for the fund manager to curb excessive risk taking. The EU's executive has also proposed rules requiring the sellers of so-called packaged retail investment products such as mutual funds to provide clients with an information document outlining the risks and the costs involved. "The idea is that the purchaser understands the product that he or she is buying and understands the potential risk," said Barnier. The latest round of reforms is part of a push by Barnier to protect consumers. So far, his regulatory drive has focused largely on the wholesale financial industry and issues such as bonus payouts and the control of banks and trading. The European Commission writes the first draft of laws but the 27 countries in the European Union and its parliament have the final say and often make changes. (Reporting by John O'Donnell in Brussels,; additional reporting by Myles Neligan in London.