Last week, Aiviq convened industry leaders from 12 global asset managers, including Designated Persons from Irish ManCos, at The Westin in Dublin. The focus of our discussion: the ever-evolving regulatory landscape in distributor oversight, specifically the evolution of CP86 and CP138 from the Central Bank of Ireland (CBI). These regulations have ushered in a renewed focus on fund distribution strategy and our roundtable provided a platform for leaders to share how they are responding.
What Are CP86 and CP138, and Why Do They Matter?
CP86, known as the "Dear Chair Letter," aims to enhance the effectiveness of Fund Management Companies (FMCs). Its overarching goal? Empower FMCs to exercise substantive control over the activities of their delegates. The guidance extends to self-managed investment companies (SMICs), UCITS management companies, alternative investment fund managers (AIFMs) and AIF management companies incorporated and authorised in Ireland.
CP138 (Cross Industry Guidance on Outsourcing), introduces all firms to the responsibility of maintaining a central register of all outsourcing and implementing a robust risk management framework, KPIs, and MI for oversight and accountability.
The Challenges and Solutions
Speakers at the roundtable underscored the critical importance of data accuracy and transparency in this new regulatory environment. Chris Martin , Director at Alpha FMC, highlighted the common challenges faced by companies:
- Developing documented policies and procedures for onboarding new distributors, coupled with a risk-based approach to ongoing due diligence
- Leveraging new technologies and data sources to enhance MI and reporting capabilities for Designated Persons and Boards
- Digitilising processes and workflows to reduce manual workarounds and emails
- Establishing Service Level Agreements (SLAs) with third parties and distributors
Insights from Keynote Speakers
Mike Langridge , Distribution Governance Manager at Baillie Gifford, discussed their focus on establishing repeatable controls to demonstrate oversight to regulators. He stressed the importance of including various metrics in Distributor Impact Assessments, such as AUM, location, distribution channels, and product complexity and proposed a distributor tiering approach for oversight, including a "no-go" tier that sets a minimum standard below which a manager should be unwilling to engage in business. This, he argued, is crucial for demonstrating compliance to regulators.
The Role of Aiviq
Aiviq processes over 250 different sources of client AUM & Flow transparency data globally to provide visibility across the distribution value chain. Though our innovative TermsCloud application, Aiviq is also able to master distribution agreements, codify fee and rebate terms, and facilitate deeper distributor data governance and net revenue reporting, integrating into onboarding and client service workflows. Learn more about TermsCloud here.
Our Aiviq Roundtable on Distributor Oversight has illuminated the challenges and opportunities within the industry. As we navigate the ever-evolving regulatory landscape, collaboration and data transparency will be pivotal to our collective success.
We extend a big thank you to our insightful thought leaders for their invaluable contributions. Stay tuned for more thought-provoking discussions and join us in shaping the future of asset management! 💼📈