Regulatory remediation in the form of ESMA’s latest position as set out in the Q&A on UCITS and the FCA’s position as highlighted in its policy statement, PS 19/4 has managers focused on compliance with increased transparency requirements for existing UK UCITS ahead of a 07 August 2019 deadline. Managers of Lux and Irish UCITS (and those established elsewhere outside the UK) will also be mindful of the new ESMA Q&A clarifications when next updating their KIIDs to ensure they include relevant disclosure on the use or otherwise of benchmarks.
At the same time as focusing on compliance with new expectations and remediation for now and for the future, the potential question of accountability for the past lurks in the shadows, as illustrated by developments in class actions in Norway and Canada reported recently.
For reasons more fully explored in our more in-depth article (here) although new rules and requirements mean changes in how the management of existing funds will be described to investors, in most cases the fact something has changed to reflect new requirements will not be any kind of recognition of previous failings - rather the bar is being raised.
Our sense is that in the UK, other than in the more extreme cases, the FCA’s focus will be on improving transparency going forward and that, therefore, the priority is on adhering to ESMA’s Q&A and FCA PS 19/4 and adopting new expectations, not on the potential significance of any resulting changes as to the past.
Our further article also comments on developments with respect to closet tracking in the context of the FCA’s latest consideration of the potential to introduce a new duty of care to investors.
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