FSA has published its second consultation paper on implementation of the AIFMD. It starts the paper by explaining it cannot yet consult on all the matters it originally intended to cover. It says this is because of continuing implementation work at EU level as well as the challenges FSA has faced in moving to the new regulatory structure. This paper addresses:

  • progress on EU measures to implement the AIFMD since FSA’s first consultation paper (see FReD 16 November 2012), how FSA plans to give guidance about the scope of the AIFMD and FSA’s current views on delegation by alternative investment fund managers (AIFMs);
  • changes to some existing organisational and conduct of business rules that will affect full-scope UK AIFMs, and how FSA plans to amend its rules to implement Treasury’s proposals for specialised regimes for smaller AIFMs;
  • further proposals for prudential rules and guidance, including the proposed prudential regime for small authorised UK AIFMs;
  • which types of AIFM and depositary will be within the scope of the Financial Ombudsman Service (FOS), the FSCS, or both;
  • depositaries, and how current client assets rules will apply to some types of depositary;
  • marketing and how AIFMs may exercise single market passporting rights. FSA also addresses how it will approach registering funds being marketed through national private placement, and approving non-UK AIFs as recognised schemes that can be marketed to the general public; and
  • fee proposals.

FSA has realised it will be too difficult to bring all its proposed new FUND Sourcebook into effect for July 2013, so instead will retain COLL for an interim period, bringing into effect only those chapters of FUND that it needs to in order to implement the AIFMD. It will then consult later in the year on transferring provisions from COLL to FUND. FCA will consult after April on consequential changes to bring the rest of what will be the FCA Handbook into line with the rules covered by the two FSA consultations, and to provide for the marketing and management passports for non-EEA AIFMs and non-EEA alternative investment funds (AIFs), which will not become operational until EU delegated legislation brings them into effect.

FSA suggests firms take away a number of key messages from the consultation:

  • UK firms managing and/or marketing AIFs in the UK will be able to make full use of the 12-month transitional period whether these AIFMs become authorised or registered. This will be the case irrespective of whether the AIF concerned is an EEA or non-EEA AIF. Firms that manage AIFs from an establishment in the UK will have until 21 July 2014 to apply to become a UK-registered or UK-authorised AIFM, or to vary their permission;
  • FSA (FCA) plans to assess any delegation arrangements on a case-by-case basis in a robust and flexible way, while taking account of the EU requirements. It is working on the basis that there will be no objection to the Commission Level 2 Regulation. FSA (FCA) plans no supervisory assessments of a firm’s delegation arrangements during the transitional period from 22 July 2013 to 21 July 2014, until the firm applies for authorisation or a variation of permission to become an AIFM; and
  • FSA continues to work on a way to give firms certainty that they will be able to operate as they currently do from 22 July. FCA will make further announcements about this.

FSA needs comments by 10 May and will issue a full policy statement in June. However, it intends to confirm its policy positions on key issues sooner and separately, to give firms as much time as possible to prepare for 22 July. (Source:CP13/9*** Implementation of the AIFMD Part 2)