Following the SFC’s consultation conclusions of November 2017 on the Proposals to Enhance Asset Management Regulation and Point-of-sale Transparency, which included proposed amendments to the Fund Manager Code of Conduct (FMCC), there is now less than three months before the revised FMCC takes effect on 17 November 2018.
The review process
SFC-licensed fund managers should by now have commenced the process of reviewing the impact of the FMCC changes on internal policies and procedures, fund documentation and relationships with investors and key service providers. In short, the process includes:
- Assessing whether the manager is responsible for the overall operation of the fund (ROOF). Please note additional obligations are imposed on managers that are ROOF;
- Reviewing the offering documents and constitutive documents to ensure that these documents meet the changes required under the revised FMCC;
- Ensuring that the fund has in place the relevant policies and procedures required under the revised FMCC and if yes, whether existing policies and procedures need to be updated to comply with the new requirements;
- Reviewing marketing materials to ensure compliance with the revised FMCC; and
- Assessing whether discretionary investment management agreements need to be amended to comply with the revised FMCC.
Consequences of non-compliance
The revised FMCC does not have the force of law. It sets out conduct requirements for all SFC-licensed managers of collective investment schemes and/or discretionary accounts. Any breach of the FMCC is likely to have an adverse effect on the assessment of a fund manager’s fitness and properness to hold an SFC licence and may result in disciplinary action.
More information and next steps
Given that the effective date of the revised FMCC is less than three months away, the review process should be well under way.