28.04.2015 INVESTMENT ASSOCIATION STATEMENT OF PRINCIPLES FOR INVESTMENT MANAGERS

The Investment Association (IA) has published a statement of principles for investment managers which sets out the common principles that “underpin the mindset and behaviour of investment managers”.

The statement lists the following ten principles:

  • putting clients’ interests first and ahead of an investment manager’s own interests;
  • taking care of clients’ money as diligently as an investment manager would their own;
  • only developing and offering funds and services designed to add value for clients and help them achieve their financial goals; 
  • maintaining and applying the investment and operational expertise needed to meet the objectives agreed with clients;
  • ensuring transparency and clarity of all costs and charges;
  • maintaining regular and clear lines of communication with clients;
  • clearly setting out the approach to the stewardship of client assets and interests;
  • maintaining a corporate culture that reflects and sustains these principles; and
  • working with industry colleagues and stakeholders to develop and maintain guidance on industry best practice. 

The term “client” used in the principles includes people with whom an investment manager may have an indirect relationship.

The IA intends to review the principles in January 2017. The IA has invited its members to register as signatories to the Principles. 

22.04.2015 UCITS FIRMS AND CLIENT MONEY 

The IA has clarified the position of UCITS firms which have permission to hold client money.

On the face of it this means that those firms will be treated as CRD IV firms with the Remuneration Code implications which that entails. But the IA has pointed out that this is only the case if such firms have permission to hold client money in relation to MiFID business which they carry out – for example, investment advice or investment management under Article 6 of the UCITS Directive and COLL 6.9.9. 

If the client money permission is only held in relation to UCITS business then a firm may apply for a variation of its permission to limit its client money permission to non-MiFID business. This should result in a firm being treated as a CRD III firm rather than CRD IV. 

29.04.2015 AIMA GUIDE FOR FUND DIRECTORS 

The Alternative Investment Management Association (AIMA) has published an updated Fund Directors’ Guide.

The Guide, last published in 2008, takes account of regulatory and tax reforms since the financial crisis, such as the Alternative Investment Fund Managers Directive (AIFMD) and the Foreign Account Tax Compliance Act (FATCA), which have brought significant changes to the role and responsibilities of fund directors and boards. 

The Guide is designed to be used by investment managers, fund promoters and existing and prospective fund directors.

New sections have been added covering, among other topics, the general approach to fund governance, monitoring of trading practices and business continuity planning. 

Practical, legal and tax considerations when selecting and appointing fund directors are considered. The basic tasks that fund directors should carry out are explained, while issues relating to the way in which fund directors manage their relationships with the fund’s service providers are also discussed. 

Guidance is provided on several important issues, including, for example, the review of annual audited accounts and issues relating to directors’ and officers’ liability insurance. In addition, the Guide assesses the impact of taxation on the fund, its service providers and its directors.

25.04.2015 FCA REGULATION ROUND-UP APRIL 2015

The FCA has published its monthly email to all regulated firms, with updates on the latest news affecting relevant sectors which the firm’s practice is in.

In particular, the FCA has focused on the new internal structure for the Authorisations and Supervision divisions. The Supervision Retail and Authorisations will cover the sectors with the largest mass market footprint; retail banking; retail lending; general insurance and protection. The Supervision Investment, Wholesale and Specialists Division will cover investment, wholesale banking and markets.

Updates in the following areas are included in the email:

  • banks & building societies;
  • investment managers & stockbrokers (retail & wholesale);
  • financial advisors;
  • wealth managers & private bankers;
  • mortgage lenders & brokers; 
  • insurers & insurance intermediaries;
  • consumer credit; and
  • credit unions.

 21.04.2015 FCA PUBLISHES AIFMD NPPR MATERIAL CHANGE NOTIFICATION FORMS 

The FCA has updated its webpage on the national private placement regime (NPPR) under AIFMD with the notification forms to be submitted to it concerning material changes to the information previously submitted to it by certain alternative investment fund managers (AIFMs) using the NPPR in the UK: 

The FCA has also published a guidance note to assist firms when completing these forms. 

Firms should submit completed forms to NPPRChanges@fca. org.uk. The subject line of the email should contain the firm reference number (FRN) followed by the words “NPPR Material Change notification”. Only one notification form should be submitted per email. 

The FCA welcomes any feedback on the latest version of the NPPR forms. Please send comments to NPPRQueries@fca. org.uk with the subject line: “NPPR Form Feedback”. 

25.03.2015 COURT OF APPEAL DECISION ON COLLECTIVE INVESTMENT SCHEMES UNDER FSMA 

The Court of Appeal has dismissed an appeal in a case brought by the FCA relating to firms promoting and operating collective investment schemes without authorisation.

The FCA commenced legal action in relation to projects run by African Land Limited and Reforestation Projects Limited in July 2013, claiming that such investment schemes were collective investment schemes under FSMA and were therefore operated without FCA authorisation. The High Court agreed with this analysis however the case was appealed to the Court of Appeal.

The main issue was whether the conditions of s 253 (3) of FSMA 2000 (the requirements that the income or profits from the scheme be pooled or that the property be managed as a whole on behalf of the operator of the scheme) would be satisfied where each investor was entitled to the profits derived from a particular plot of land. The Court of Appeal found that the operator managed the properties as entire projects and, therefore, the schemes were collective investment schemes.