FSA paper lacks clarity on Aifm directive

EUUK alternative funds such as private equity and real estate vehicles are still unsure of precisely which will be covered by the Alternative Investment Fund Managers (Aifm) directive, despite a discussion paper from the Financial Services Authority (FSA).

The FSA produced the paper to explain how it will implement the directive, the first step of which must be transposed into UK law by 22 July 2013. But consultancy PwC says the FSA has provided no clarity on which entities will be considered as managers and funds within the scope of the directive and how remuneration issues will be handled.

“Those who regard themselves at the margins of the proposed regulation and who have been urgently seeking clarity on their inclusion or exclusion from the directive's ambit will have a longer wait,” said Amanda Rowland, partner at PwC.

“It is hard for those firms, especially in the private equity and real estate worlds, to start to respond and prepare when they do not know whether they are within or outside scope.”

However, James Grieg, another PwC partner, said that several key aspects of the Aifm directive remain undecided at the European level, so the FSA may have been wise to be vague.

One takeaway from the paper, said Grieg, is that depositories of authorised funds should prepare for an increase in their own fund requirements, which could put them at a disadvantage compared with depositories which don't act for such funds.

But there is some encouraging news for private equity and real estate funds, in that the FSA is considering allowing lawyers, accountants and fund administrators to act as depositories. For funds, this could be cheaper than appointing a formal depository.

PwC said one of the biggest changes proposed by the FSA is the introduction of an internally managed fund regime.

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