The City of London Law Society (CLLS) has published its concerns regarding a recently updated version of the European Securities and Markets Authority’s (ESMA) Q&As on the application of the Alternative Investment Managers Directive (AIFMD). In particular, the CLLS writes with reference to the response to new question 2 in Section VIII on delegation. The question relates to whether an alternative investment fund manager (AIFM) that does not itself perform the functions set out in Annex I point 2 of the AIFMD is released from responsibility to ensure compliance with the relevant functions within the AIFMD.
The CLLS argues that ESMA’s response in the Q&A is based on an incorrect interpretation of the relevant provisions of AIFMD. The CLLS also believes that the response cuts directly across the approach taken by fund managers and practitioners in the UK funds industry and is not supported by the approach taken by the FCA in its Investment Funds Sourcebook or in its Perimeter Guidance Manual. The CLLS asks the FCA to update its rules and guidance, or otherwise take steps to give effect to ESMA’s Q&A on delegation.