Value for Money Assessments

In July 2019, the Central Bank of Ireland (CBI) published an industry letter outlining the results of their Thematic Review of Closet Indexing.

One of the CBI’s findings related to a “lack of regular assessment by the Board to determine whether the performance of the UCITS is reflective of the expected active management the investors are paying for, and if the fees charged are commensurate with the level of actual active management and performance achieved.”

Further, the CBI recommended “when assessing the investment managers annual presentation, the Board should consider if the UCITS has delivered on the stated objective and remains a viable and suitable investment for investors. This review should be documented and assess, inter alia, the UCITS performance, fee structure and investor base. The fees charged on all share classes within each UCITS should be reviewed to assess whether they are appropriate for the targeted level of outperformance of the UCITS against its benchmark.”

The CBI’s recommendation aligns with the UK FCA requirement for funds to perform an annual “value for money” assessment across a number of criteria, including: quality of service; costs; economies of scale; comparable market rates; comparable services; and classes of units. 

The CBI’s Fund Management Companies–Guidance (CP86) requires investment managers to provide a detailed annual presentation to the board (Part I (26).The annual presentation is a current area of focus with the CBI’s thematic review team.

Managers of Irish funds should conduct, at a minimum, an assessment of the fee level per share class against the investment return achieved and assess whether the fund continues to provide value for money to investors. This documented review should be included in the next scheduled annual investment manager presentation to the fund board.

 
Value for Money Assessments 2020-02-19T05:00:00.0000000 /insights/publications/compliance-and-regulatory-consulting/value-for-money-assessments /-/media/assets/images/publications/featured-images/2019/compliance-and-regulatory-consulting/luxembourg-rbe.jpg publication {DA6CC51B-740E-439A-B283-2BBFB5326BAA} {DE05ECA4-1852-4BEF-A4E1-491CB497F9CB} {4984481D-079C-4B42-B985-EA34752D3CD5}

Related Services

By Jurisdiction

Regionally targeted assistance for asset managers in compliance program development, implementation and maintenance

By Jurisdiction

Irish Regulation

Comprehensive support for asset managers registering in Ireland.

Irish Regulation

Insights

Compliance

FCA Sends 'Dear CEO Letter' to Firms About COVID-19

Compliance
Compliance

ESMA Statement On Recording Telephone Communications

Compliance
Compliance

ESMA and FCA Short Selling Announcements

Compliance
Compliance

Regulatory Focus – February 2020

Compliance