FCA Authorised Corporate Directors (ACDs) conflicts probe
What is happening?
It was identified in November 2020 that the FCA is investigating eleven fund firms as part of its review into Authorised Corporate Directors (ACDs). This relates to potential conflicts of interest around external ACDs’ governance and oversight of retail investment funds.
As part of a letter outlining its priorities in the asset management sector, the FCA wrote in January 2020: “In these cases, a conflict of interest may arise if the ‘host’ ACDs cannot oversee the fund properly because, for example, it is concerned to avoid a loss of revenue from the investment manager if it were to offer more assertive challenge. We are concerned that ‘host’ ACDs may not be undertaking their responsibilities effectively in some cases, leading to poor value products and them failing to ensure risks are properly managed.”
It is understood that the FCA has already conducted seven virtual ‘visits’ to firms, with visits to the remainder of the sample to take place in due course.
What do you need to do?
Authorised fund managers (AFMs) are responsible for ensuring compliance with the FCA’s product governance rules (PROD). Where funds are managed by AFMs that are not within the group structure of the ACD (often known as ‘host’ ACDs), a conflict of interest may arise if the ‘host’ ACDs cannot oversee the fund properly. Such ACDs need to ensure that the conflict of interest is correctly managed and that their fund governance and oversight meet market standards.
How can we help you?
If you’d like to know more about how we can help you with your ACD operations, conflicts of interest or product governance arrangements, or with any other aspect of FCA compliance, our expert team is here to help. Contact us today on
0207 436 0630 – or email info@thistleinitiatives.co.uk.