On the 1st July 2011, UCITS IV was transposed into UK law. These new regulations include some substantial new requirements relating to risk management, for which there is no transitionary period. Do you meet the new requirements?
What is UCITS IV?
The original Undertakings for Collective Investments in Transferable Securities (UCITS) Directive was first approved in 1985, in order to enable collective investment schemes to operate more freely and consistently across borders within the European Union. There have been a number of changes to the Directive since then – and the latest of these, known as UCITS IV, was transposed into UK law on 1st July 2011.
The proposed changes promise to do much to address inefficiencies which have previously impacted on UCITS funds, both at the EU and global level.
How UCITS IV impacts Risk Management
It would be easy to have overlooked the section on risk management requirements as it doesn’t stand out in the official FSA/HM Treasury consultation document. However, its impact is far-reaching and includes substantial new requirements relating to risk management governance, processes and procedures - and to the way in which the risk of specific UCITS schemes/funds should be monitored and reported on.
Furthermore, unlike changes in other areas, such as investor disclosure, there is no transition period within the Directive for the UCITS IV risk management requirements – and consequently, they entered UK law on the 1st July 2011.
Given that most of the new requirements are rules rather than guidelines, this leaves asset management firms have had little time or flexibility to prepare. Does your organisation now meet the new requirements?
UCITS IV Risk Management – are you ready?
Is your organisation the Authorised Fund Manager (AFM) for one or more UCITS schemes/funds – or do you provide risk management services to such an organisation?
If so, you may need to have made changes to your current governance, processes and procedures, in order to comply with the new UCITS IV risk management requirements.
To help you determine whether the changes you have made are sufficient to meet some of the new regulations, please click below to receive our summary readiness check.
How The Berkeley Partnership can help
Established in 1990, The Berkeley Partnership is a London based management consultancy with a long and successful track record in financial services.
Berkeley’s expertise is in helping organisations successfully define and manage change – and our consultants recently helped one of the UK’s leading asset managers determine how they will change in response to the risk management requirements under UCITS IV.
By bringing together relevant expertise from across your organisation, Berkeley can help you achieve a clearer and more complete understanding of what the new requirements really mean for your business – and what changes you may need to make in order to meet them.
If you would like to speak to us instead, or as well, please contact Mark Bryant