News
FCA S166 - Reputational or Financial Damage for Fund Managers / Sponsors?
Saturday 25th September 2021
Ryan Johnson
Having been asked by a number of managers recently about the ACD market review and been told that they have had an indication the FCA were taking a stronger stance including consideration of issuing a section 166 to those ACDs that appear to be failing, we detail the process when a S166 has been issued and what to expect.
The question many managers and sponsors have asked is, Are Fund Managers / Sponsors and their funds exposed to financial or reputational damage regardless if investors are retail or instutional if they become aware that the fund oversight function of an ACD has been issued with a S166.
This is a key question and as the industry has become much more aware as a result of recent examples regarding the fund oversight function of an ACD / Despositary and Custodian it is important that everyone takes 'stock' and assesses any risk that may result.
We have consistently outlined the importance of finding the right ACD partner and also reviewing this partner as part of good due diligence at least once every three years to ensure the parties are still aligned.
These recent examples emphasis this point ever more and having spoken to many fund buyers apart from the usual items for consideration when buying a fund they have asked us if a consideration should be made to who the ACD of the fund is before buying the fund.
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