Europe: Central Bank’s Dear CEO Letter Highlights Actions to be Addressed by FMCs and AIFMs Without Delay
By Gayle Bowen and Áine Ní Riain
On 24 March, the Central Bank of Ireland issued a “Dear Chair” letter following its review in 2021 of the costs and fees charged to UCITS as part of the ESMA Common Supervisory Action (the CSA).
The letter, which is addressed to Irish UCITS fund management companies (FMCs), sets out the Central Bank’s main findings from the 2021 review and its expectations on actions to be taken by FMCs to address deficiencies identified. Despite the focus being on UCITS FMCs, the Central Bank specifically emphasises that it will expect its findings and actions to be considered also by Irish AIFMs with reference to AIFs under management.
The letter highlights that the oversight and calibration of costs and fees need to be made a priority for UCITS. It requires that boards of FMCs consider and discuss the contents of the letter and take necessary actions to address any deficiencies in their practices without delay. Specifically, the Central Bank requires that all FMCs and AIFMs conduct a gap analysis of the requirements of the letter as against their present practices and put a plan in place by the end of Q3 of this year to address any gaps. FMCs and AIFMs should immediately begin this analysis and consider what steps and changes are needed to meet the Central Bank’s expectations.
For more information on this regulatory update we suggest a read of our full article or contact one of our authors.