News that Australia’s Link Group is looking to sell a UK subsidiary business that provided external ‘authorised corporate director’ (ACD) services to the collapsed Neil Woodford fund was a reminder of how fraught outsourcing can be in the regulated world of asset management.

An investigation into the ACD is ongoing, but it’s worth remembering that an ACD – like a ‘ManCo’ or an ‘AIFM’ in the broader EU cross-border market – is a corporate entity that carries out governance duties for a fund, including supplier oversight and compliance with regulation. Asset management usually describes the functions it outsources as ‘non-core’. This makes it tricky to outsource the function that should be ensuring a fund is governed well – and perhaps for this reason, ManCo outsourcing has taken time to mature.

Regulators will remind fund providers that while they can outsource a function, they cannot outsource the responsibility. At the Luxembourg Asset Management Conference in March, a panel will consider the role of fund boards in ESG (for ESG, we might read ‘greenwashing’). In our Luxembourg report (see Opinion, p40), we hear that a fund board has final responsibility for all its activities, even if technically, the duty to provide information under the EU’s sustainable investing rules falls to the fund’s appointed AIFM or ManCo.

Nick Fitzpatrick, group editor, Funds Europe

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