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CP86 Follow Up
AUTHOR(S): Tara Doyle, Michael Jackson, Dualta Counihan, Anne-Marie Bohan, Shay Lydon, Liam Collins, Philip Lovegrove, Elizabeth Grace, Oisin McClenaghan, Michelle Ridge, Barry O’Connor, Donal O’Byrne
PRACTICE AREA GROUP: Asset Management and Investment Funds
The 1 July 2018 deadline for compliance with the Central Bank of Ireland (“Central Bank”) fund management company requirements and guidance (CP86) has passed and the Central Bank's focus has moved to reviewing CP86 implementation. The Central Bank has issued two CP86-related notices: a notice relating to fitness and probity requirements for directors being appointed as designated persons; and a second notice relating to the Central Bank’s focus on organisational effectiveness in reviewing the implementation by firms of the requirements and guidance.
Central Bank Clarifies Fitness and Probity Requirements for Directors Performing Designated Person Roles
On 15 June 2018, the Central Bank published a notice relating to fund management company directors who act as a designated person. The Central Bank clarifies in the notice that a PCF 39 application is required where:
- an individual is seeking to perform a designated person role; or
- a director (acting as PCF 1 or PCF 2) also seeks to perform a designated person role.
The Central Bank notes that the Fund Management Companies Guidance (“Guidance”) sets out that a designated person role for managerial functions should be considered separately to the role of director. The Central Bank therefore considers that both roles require a separate fitness and probity assessment.
The notice clarifies that, from 1 July 2018, the Central Bank will require any director who also wishes to act as a designated person to apply for approval as both a PCF 1 or PCF 2 and as a PCF 39. (Directors of existing fund management companies, who were acting as designated persons on or before 30 June 2018, were not required to complete a PCF 39.)
The notice also states that the Central Bank is conducting a review of the current PCF 39 role with the Fitness and Probity framework more generally and that additional information in relation to the review will be issued to stakeholders in due course.
Central Bank to Assess CP86 Implementation
On 5 July 2018, the Central Bank issued a notice relating to the fund management company requirements set out in the Central Bank UCITS Regulations, the AIF Rulebook and its related Guidance, which came into full effect on 1 July 2018.
The notice advises that, from 1 July 2018, Central Bank supervisors will be assessing how fund management companies have implemented and embedded the new requirements and related Guidance into their organisations. The Central Bank will place specific emphasis on assessing the appropriateness of the fund management company’s resources and organisational structure. Through supervisory engagements with relevant firms, the Central Bank will focus on the assessment work performed by the organisational effectiveness role holder and, in particular, how the board of the fund management company have implemented any proposals to improve organisational effectiveness.