FCA issues guidelines in relation to funds and COVID-19

On 6 April the FCA published a webpage setting out its expectations on funds in light of COVID-19. The page includes some helpful guidelines, although it is focused on UCITS and non UCITS retail schemes (NURS) rather than private funds. That said, there are some general messages relevant for all fund managers. In particular:

• Whilst the FCA acknowledges the significant challenge firms are facing, it expects firms to continue to uphold the best interest of their investors at all times.
• The FCA expects firms to contact it, when appropriate, to communicate issues of material concern under Principle 11.

Key points for UCITS and NURS managers to be aware of in light of the FCA guidelines:

Annual and half yearly reports – The FCA has granted temporary relief allowing UCITS and NURS authorised fund managers to delay publication of funds’ annual and half yearly reports by two and one month respectively. There are certain conditions which need to be met to use this relief and managers should:

• promptly inform the fund’s depositary and auditors;
• email the FCA with details of the funds this will apply to and the intended new date of publication;
• publish a prominent statement on their website, no later than the original publishing date of the annual or half-yearly report, explaining the reasons for their decision and giving the revised publication date;
• consider what other steps they could take to bring the deferred publication date to the attention of investors.

 Virtual meetings – The FCA acknowledges the operational challenges firms face and confirmed that they don’t have any supervisory concern about general meetings of fund investors being held virtually. However, this is subject to fund rules and the FCA highlighted that managers will need to consider the terms of their fund documentation when making arrangements for meetings during this time.

Ensuring compliance with limits on value at risk (VaR) – The FCA has confirmed that risk controls play an important role in protecting investors’ interests and ensuring the fund is managed appropriately. The FCA therefore expects firms to have plans in place already to deal with such events and to take appropriate remediation action, considering market conditions and what is in the best interests of their customers. If a firm has issues managing risk limits and specifically VaR limits, they should contact the FCA.

Electronic signatures – The FCA has confirmed that during the coronavirus crisis, it is willing to accept electronic signatures on applications to authorise funds or approve changes to funds. Where possible, applicants should validate accompanying documentation and the FCA emphasised that it needs to be assured that the signatory has seen and agreed with all the information in the form. This clarification applies only to information sent by firms to the FCA.