The UCITS V Directive introduces a number of targeted reforms to the UCITS Directive with the objective of updating the legislative framework to ensure the safekeeping of UCITS fund operations across the EU, to lower risk surrounding the management of UCITS funds, and to build consumer protection and trust in the market.
UCITS V addresses three main areas of UCITS fund legislation:
- depositaries;
- remuneration principles; and
- national sanction regimes.
While the implementation of UCITS V will primarily be achieved through changes to FCA rules, some legislative changes will be required. HM Treasury has therefore published a consultation document concerning the implementation of UCITS V.
On UCITS depositaries, HM Treasury will implement provisions relating to liability in the case of losses of financial instruments in custody, or other losses caused by a depositary’s negligent or intentional failure to fulfil its obligations.
On sanctions, HM Treasury will implement:
- provisions related to the reporting and sharing of information related to sanctions;
- the requirements on the FCA relating to the sharing of information with other competent authorities, establishing specific procedures for the reporting of infringements of the Directive, and providing information regarding the imposition of sanctions to the European Securities and Markets Authority;
- setting out the limited circumstances in which the FCA may refuse to act on a request for information from the competent authority of another EEA State concerning criminal investigations or proceedings;
- the amendments and modifications to existing legislation to ensure that reporting of sanctions is carried out in a way which handles information appropriately and protects employees of management companies and depositaries;
- amendments to the Financial Services and Markets Act 2000 to ensure that the FCA’s existing administrative sanctions can be applied in relation to infringements of domestic legislation transposing the Directive; and
- provision is also made for the reporting and publication of sanctions measures for infringements of the Directive.
The consultation document seeks views on HM Treasury’s proposed implementation methods, as well as the impact and costs to industry in ensuring compliance with the above provisions.
The UCITS V provisions relating to remuneration will be implemented through amendments to the FCA Handbook.
The deadline for comments on the consultation document is 17 December 2015. The implementation deadline of UCITS V is 18 March 2016.
View Consultation on amendments to the UCITS Directive (UCITS V), 23 October 2015
