EG 19.27 2 Alternative Investment Fund Managers Regulations 2013

EG 19.27.1

2The AIFMD UK regulation transposes AIFMD1 and makes the necessary changes to UK legislation in relation to the EuSEF regulation, the EuVECA regulation and the ELTIF regulation. It1 provides new and updated powers in relation1 to both existing and new managers of AIFs, whether authorised or registered.

EG 19.27.2

2The AIFMD UK regulation includes information gathering and sanctioning powers that enable the FCA to investigate and take action for breaches of the regulations and directly applicable EU regulations. Specific standalone powers are in the AIFMD UK regulation for unauthorised AIFMs, by applying relevant sections of the Act. Amendments to the Act, including those made under the Financial Services and Markets Act (Qualifying EU Provisions) Order 2013, extend certain FCA powers (e.g. disciplinary powers, injunctions and restitution) so that they apply to contraventions of requirements of the AIFMD UK regulation and to contraventions of directly applicable EU regulations.

Information gathering and investigation powers

EG 19.27.3

2The FCA has decided that its approach to enforcing the AIFMD UK regulation requirements will mirror its general approach to enforcing the Act in EG 2. Therefore, the FCA will apply the same procedures and policies under the Act for appointing investigators and requiring information for breaches of the AIFMD UK regulation.

EG 19.27.4

2The new powers under the AIFMD UK regulation include powers of direction and the power to revoke the registration of small registered UK AIFMs, including a EuSEF manager or a EuVECA manager and, in some circumstances, EEA managers of a qualifying social entrepreneurship fund or a qualifying venture capital fund, respectively.

EG 19.27.5

2The FCA will respect the principle of proportionality when taking action against EuSEF or EuVECA managers for breaches identified in articles 22 and 21 of the directly applicable EuSEF regulation and EuVECA regulation, respectively. The FCA may take action to ensure compliance with the regulations or prohibit the use of the designation of EuSEF manager or EuVECA manager and revoke registration of such managers. The prohibition route is more likely to apply to serious breaches of the EU regulations such as in situations where:

  • registration has been obtained through false statements or any other irregular means; or

Decision making under the AIFMD UK regulation

EG 19.27.6

2The RDC is the FCA's decision maker for some decisions under the AIFMD UK regulation, as set out in DEPP 2 Annex 1G. The RDC will make its decisions following the procedure in DEPP 3.2 or, where appropriate, DEPP 3.3 and 3.4. For decisions made by executive procedures, the procedures to be followed are in DEPP 4.

EG 19.27.7

2The AIFMD UK regulation does not require the FCA to publish procedures to commence criminal prosecutions. However, the FCA will normally follow its equivalent decision- making procedures for similar decisions under the Act.

EG 19.27.8

2The AIFMD UK regulation applies the procedural provisions of Part and Part 26 of the Act for matters that can be referred to the Tribunal and to warning and decision notices under the regulations as it applies to referrals and notices under the Act. The AIFMD UK regulation also applies sections 205 and 206 of the Act to unauthorised AIFMs and, accordingly, the FCA will give third party rights (section 393 of the Act) and access to material (section 394 of the Act).

Imposition of penalties under the AIFMD UK regulation

EG 19.27.9

2When determining whether to take action to impose a penalty under the AIFMD UK regulation, the FCA's policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. When determining the level of financial penalty, the FCA's policy includes having regard to relevant principles and factors in DEPP 6.5 to 6.5A, DEPP 6.5B, DEPP 6.5D and DEPP 6.7.

EG 19.27.10

2As with cases under the Act, the FCA may settle or mediate appropriate cases involving civil breaches of the AIFMD UK regulation to assist it to exercise its functions. DEPP 5, DEPP 6.7 and EG 5 set out information on the FCA's settlement process and the settlement discount scheme.

EG 19.27.11

2The FCA will apply the approach to publicity that is outlined in EG 6.

Statement of Policy in section 169(7) interviews (as applied by the AIFMD UK regulation)

EG 19.27.12

2Regulation 71(2) of the AIFMD UK regulation applies section 169 of the Act in respect of unauthorised AIFMs, which requires the FCA to have a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. The FCA will follow the procedures described in DEPP 7.