Authorised Fund Management firms governance and operations
What has happened?
The FCA requires ‘host’ Authorised Fund Managers (AFMs) to improve their standards following a review of fund managers published in June 2021.
What do you need to do?
Host AFMs are fund operators that delegate investment management to third-party investment managers outside their corporate group.
The FCA found that, while some firms were operating well, others did not meet FCA standards. Weaknesses were identified in governance structures, conflicts of interest management and operational controls, and the FCA found some firms referring to funds as if they were solely operated by delegate third-party investment managers or fund sponsors rather than themselves and identified a lack of focus on controlling the risk of harm from investors exposed to inappropriate or poor value products.
The review focused on host AFMs, but some of the findings are also applicable to in-house AFMs.
The FCA will provide written feedback to all firms in the review and a small number will be required to undertake section 166 Skilled Person reports to improve compliance. The FCA will review the progress each reviewed firm has made in 12-18 months. Firms may also be asked to hold additional capital to guard against the risks in their business.
The FCA has also announced that it is conducting further work to identify whether changes are needed to the regulatory framework that firms operate under and that this could include rule changes.
How can we help you?
If you’d like to know more about how we can help you with your AFM governance and controls arrangements, or any other regulatory compliance issues, our expert team is here to help.
Contact us today on 0207 436 0630 or email info@thistleinitiatives.co.uk.