The Central Bank of Ireland (the “Central Bank”) has announced its plans to undertake a thematic inspection of UCITS performance fees as part of its ongoing supervision of investment funds and will carry out on-site visits of certain depositaries and administrators over the coming weeks in order to facilitate this inspection. The firms identified for inspection are due to be notified in the coming days.

It is expected that the Central Bank will focus on the practices used by administrators to calculate performance fees to assess whether such fees are calculated correctly and in line with the relevant fund’s prospectus documentation.

For depositaries, the Central Bank will examine whether the calculation of performance fees are being checked by the fund’s depositary and whether any issues regarding these calculations are being followed up by the depositary.

The Central Bank expects to complete its analysis and assess its findings by the end of May 2018 and will then determine what, if any, action / communication might be required.

Given the increased discussions on the area of performance fees by the European Securities and Markets Authority (ESMA) , it is understood that such inspections will provide the Central Bank with a basis for such discussions at a European level.