Contents

• COVID-19: FCA expectations for funds

Following a seasonal break, the next update will be published on 27 April 2020.

COVID-19: FCA expectations for funds

On 9 April 2020, the Financial Conduct Authority (FCA) published a webpage setting out its expectations regarding funds in light of COVID-19. The FCA acknowledges the significant challenge firms are facing in the current environment. Nevertheless, it stresses that it expects them to continue to uphold the best interest of their investors at all times. The FCA addresses some queries received from firms in relation to the following:

• Delaying annual and half-yearly fund reports – some firms have asked the FCA whether publishing annual and half-yearly fund reports can be delayed and it has agreed to do this.
• Virtual general meetings – the FCA has been asked whether firms can hold general meetings of fund unitholders in a virtual format and whether a unitholder may be considered to be present at the meeting if they are participating in, or have joined a virtual meeting. The FCA does not have a supervisory concern about meetings being held in that format. However, fund documentation may contain details about arrangements that are additional to what is prescribed by the FCA's rules. The FCA cannot forbear on private law obligations owed by authorised fund managers (AFMs) to unitholders or claims that they might bring. So, AFMs need to consider the terms of their fund documentation, including prospectuses and instrument of incorporation, when making arrangements for meetings.
• Ensuring compliance with limits on value at risk (VaR) – the FCA understands some authorised fund managers have experienced issues ensuring compliance with limits on value at risk (VaR) as part of their risk-limit systems. It expects firms to already have plans in place 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 individual firms continue to face issues managing their funds within risk limits generally, and VaR limits specifically, they should contact the FCA.
• Electronic signatures – the FCA is aware that some firms are making fund-related applications to it and are struggling to obtain wet signatures (that is, physically signed) on their application documents. During the current situation, the FCA is willing to accept electronic signatures on applications to authorise funds or approve changes to funds. This only applies to information sent by firms to the FCA.

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