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AIFMs not ready for Annex IV reporting
06 January 2015 London
Reporter: Stephanie Palmer

Image: Shutterstock
Only half of alternative investment fund managers are ‘fully aware’ of the Annex IV reporting requirements applicable to them under the alternative investment fund managers’ directive (AIFMD).

In a survey by the Moore Stephens financial services team, half of the respondents said they were completely aware of the requirements and of the timetable for submission, even though the first submission deadline is 30 January.

Of the respondents, 42 percent said they are somewhat aware of the requirements, but still unsure of the exact information required, while 35 percent said they are not prepared for the process.

Under the AIFMD, fund managers must submit a set of financial and activity reports in order to improve transparency in the industry.

The Moore Stephens report suggested that the lack of preparation could be attributed to a shortage of guidance from the Financial Conduct Authority in the months leading up to the deadline. It did, however, acknowledge that the FCA has now issued detailed information on the technical aspects of reporting, and allowed mock reports to be submitted in a test environment.

Despite the trouble with awareness, 88 percent of respondents were confident in the ability of their systems to cope with reporting.

Although 4 percent said they may engage a third party provider to issue the reports, Moore Stephens suggested that many more will make use of existing partnerships and outsourcing arrangements, and therefore feel confident in their access to appropriate reporting systems.

It warned managers to be vigilant in their outsourcing, suggesting they should undertake due diligence reviews and risk assessments thereby taking responsibility for their own Annex IV reporting.

Tim West, partner in Moore Stephens’ financial services team, said: “On the surface these are encouraging results, showing at least that AIFMs are aware that they need to take action. However, now that more detailed technical guidance is available, it is more apparent than ever that Annex IV reporting represents a demanding and time-consuming process. We expect that a large percentage of AIFMs may decide to outsource reporting requirements or seek assistance from third party providers.”

“Even under outsourcing arrangements, AIFMs retain full responsibility and liability for their reporting obligations. Failure to submit an accurate and complete report could have severe consequences and AIFMs should ensure they have a clear understanding of the information required and clear oversight of the regulatory reporting process.”
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