UK regulator clarifies AIFM PRIIPS position

The Financial Conduct Authority has clarified how alternative investment fund managers will be affected by a rule impacting firms with high-net-worth clients.

The UK watchdog said there were certain instances in which the governing body of an alternative investment fund, and not the AIFM, would be responsible for preparing and providing documentation investors required under the Packaged Retail and Insurance-based Investment Products regulation.

The carve out would apply when an AIF has appointed an external AIFM, but remains responsible for its own marketing, the FCA said in a note.

It also confirmed it has dropped a proposal to amend PRIIPs disclosure requirements for AIFs.
“Our rules will require firms to disclose required AIF information in either a scheme prospectus or in another disclosure document that will supplement the [Key Information Document],” it said.

PRIIPS, an EU regulation, should have been introduced on January 1, but was delayed after the European Parliament rejected its compliance guidelines in September. It will now enter into force on January 1, 2018.

Under the rules, private fund firms with high-net-worth clients are obliged to provide them with a Key Information Document of no more than three pages outlining the risks associated with the investment.

The FCA envisages that PRIIPs will be part of the body of European law which is converted into UK law, so it will still apply post-Brexit.