On 11 May 2026, the European Securities and Markets Authority (ESMA) published a final report setting out the results of its Common Supervisory Action (CSA) on compliance and internal audit functions of fund managers. The final report also includes a list of good and poor practices that Member State competent authorities (NCAs) have identified during the exercise.
In 2025, ESMA performed a CSA on the compliance and internal audit functions of alternative investment fund managers and UCITS management companies with a view to evaluate the adherence of supervised entities. All 27 EU and 3 EEA NCAs participated in the CSA. All NCAs reported to ESMA on their national CSA findings by 31 December 2025.
The CSA found that most fund managers comply with key requirements under the Alternative Investment Fund Managers Directive and UCITS framework. At the same time, the CSA identified governance weaknesses, particularly in the independence of control functions, the quality and implementation of internal policies, and the way senior management and boards exercise oversight. While most entities had relevant policies and procedures in place, NCAs observed significant differences in their quality and practical implementation, notably depending on the size, nature and complexity of market participants concerned.
Next steps
ESMA encourages NCAs to follow up on the breaches and vulnerabilities identified in the CSA, to better understand their root causes and to ensure that effective remedial actions are implemented in a timely manner. ESMA will continue to promote exchanges among NCAs on this topic, including through follow-up supervisory actions, to further enhancing supervisory convergence across the EU funds sector.