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FCA's latest AIFMD news

    • Financial services and markets regulation - AIFMD
    • Financial services and markets regulation - UCITS V
    • Financial institutions



     The FCA has updated its AIFMD news page to cover the following topics:

    • Passporting arrangements in Member States who have not transposed the Directive 
    • Deadlines for obtaining AIFM authorisation/registration before the end of the transitional period 
    • Compliance with remuneration guidelines 
    • Clarification of the FCA’s position regarding a full scope UK AIFM’s right to passport those MiFID services which are permitted under Article 6(4) of the Directive


    The FCA has confirmed that UK AIFMs should be able to exercise passporting rights in all EEA states apart from Norway, Liechtenstein and Iceland.  This is because ESMA’s recent opinion confirmed that firms may exercise passport rights in Member States which have not yet transposed the Directive.  UK AIFMs will be able to exercise passporting rights in Norway, Liechtenstein and Iceland when the EEA Agreement has been updated to include the Directive within its scope.

    Applications during the transitional period

    Firms which can take advantage of the Directive’s transitional provisions because they were already managing AIFs before 22 July 2013 will need to be authorised or registered to continue managing AIFs from 22 July 2014.

    As we have advised in previous briefings, and the FCA has now confirmed, the FCA advises firms seeking an authorisation or variation of permission under the Directive (including small authorised UK AIFMs and depositaries) to apply to the FCA no later than 22 January 2014 in case the FCA needs the full six months which it is allowed to determine the application.  This means that if firms have not already started preparing their applications for authorisation or variation of permission, they should begin to do so now.  Although the FCA will normally determine an application for authorisation as a full scope AIFMD within three months, and firms should therefore submit a complete application no later than 22 April 2014, the FCA strongly encourages firms to apply as soon as possible. The FCA also has a period of three months from receipt of a completed application to determine applications to become a small registered UK AIFM, so small self-managed AIFMs should also apply for registration no later than 22 April 2014, but again the FCA can take up to six months so firms should apply as soon as possible.

    The FCA has reminded firms that the activity of managing an AIF may not be carried on from 22 July 2014 by a person who is neither authorised or registered to perform that activity and that an authorised firm which does so without the relevant Part 4A permission will be in breach of section 20 of FSMA.  The FCA asks firms to contact it if they believe that they will not be able to meet these deadlines.

    ESMA's guidelines on remuneration policies

    The FCA confirms that it has written to ESMA to confirm that it will comply with ESMA’s guidelines on remuneration policies under the AIFMD ahead of the 3 September deadline by which time national regulators had to confirm to ESMA that they would comply with them or explain their reasons for not doing so.

    The FCA expects affected firms to make every effort to comply with ESMA’s guidelines, which are a statement of best practice for promoting sound and effective risk management in line with the underlying objectives of the Directive.

    AIFMs may be able to rely on the principle of proportionality as set out in the ESMA guidelines, which would allow some AIFMs to disapply some elements of the guidelines but that AIFMs who do so must be able to justify that the full application of the guidelines may be disproportionate.

    The FCA plans to consult further on several aspects of the guidelines, including the proportionality regime, later this year and will consider whether any additional FCA guidance on remuneration might be necessary depending on the feedback which it receives.  In the meantime, the FCA expects firms to consider their circumstances against the rules and principles provided in the AIFM Remuneration Code set out in SYSC 19B of the FCA’s rulebook.

    Although firms do not need to comply with the ESMA guidelines while taking advantage of the transitional provisions and will only need to comply from the time that they are authorised as full scope AIFMs, the FCA recommends that firms start their preparations for implementing the guidelines as soon as possible. 

    Article 6(4)

    The FCA has reiterated its previous statements on the ability of full scope AIFMs to passport those MiFID services which an AIFM is permitted to perform under Article 6(4) of the Directive (“permitted MiFID services”).

    The question concerns the ability of AIFMs to provide permitted MiFID services on a cross-border basis. 

    Notwithstanding the position of the European Commission in its AIFMD Q&As that AIFMs may not passport permitted MiFID services through the use of a management or marketing passport, the FCA’s position remains that an AIFM which is authorised to provide permitted MiFID services should be able to exercise its single market rights by passporting those services to other EEA States. 

    The FCA confirms that it will carry out requests from full scope UK AIFMs to notify a regulator in another Member State that the firm intends to provide permitted MiFID services under Article 6(4) in that other Member State.  However, the FCA reiterates the risk that the host Member State may refuse the notification in light of the opinion of the European Commission.  Whilst the FCA says that it will seek to engage with other EEA regulators and the Commission to seek to reach a common understanding that reflects the FCA’s views, firms will need to take account of this risk when considering the business model under AIFMD which is most appropriate for them and firms will therefore still need to consider establishing separate entities to perform AIFM and MiFID activities.  UCITS firms which will also be AIFMs will be able to passport permitted MiFID services under the passport regime applicable to UCITS firms, which clearly allows the passporting of permitted MiFID services. 

    For more information contact

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