Dan Waters gave a speech the other day at the Institute of Economic Affairs on “The Future of the Fund Management Industry”.
Nothing new of note was said but he did take the opportunity to reference the four priority risks highlighted in the Asset Management Sector Digest 2010 (see Regulatory Roundup 12 March). In addition to the concern that firms are failing to comply with the basic requirements for the protection of client assets and money, mention was again made of the need for robust valuation processes to ensure accurate fund valuations, whether they are authorised or unauthorised.
The FSA continues to have concerns over the reliability of valuations – an example was shown in the Digest (q.v.) – and it is to be noted that the “asset management sector team is working closely with the supervision line to ensure this issue remains in the forefront of fund managers’ minds”. No Dan Waters speech would be complete without some reference to the AIFM Directive.
We are reminded that a key area is the proposals on the marketing of, or investment in, third country funds. Worst hit would be where both the fund and the fund manager are based outside Europe; in the absence of any jurisdiction equivalence not only would marketing not be permitted but even an ‘own initiative’ investment by an investor would not be permitted.