CP86 December update: what does it mean for SMICs?

Insights - What we think

By Ed Hamilton-Russell, Head of Business Development (EMEA)

The Central Bank of Ireland’s (CBI) latest review included updated guidance that all Irish fund management companies (FMC) must appoint a minimum of three full-time employees (FTE). Find out how we can help.

We understand that Self-Managed Investment Companies (SMICs) might feel concerned about the next steps since the CBI's CP86 announcement in October. This week, the CBI clarified exactly what this announcement meant.

On 20 October 2020, the CBI published their ‘Dear Chair letter’. This explained the findings of their thematic review of CP86 – guidelines that ensure the effectiveness of all FMCs in Ireland, including SMICs.

The CBI’s review included updated guidance that all FMCs must appoint a minimum of three FTEs.

Following the implementation of CP86, SMICs who applied for authorisation from the CBI are required to demonstrate greater time commitments from the fund Designated Persons (DP) than before. Read more about this here.

As many SMICs rely on external consultants to provide DPs, increased time commitments may mean higher costs. For SMICs, the time commitments for DPs apply to the individual DPs appointed by the SMIC, whereas for a third-party Management Company it applies to the Management Company.

December update

On 9 December, the CBI clarified that all FMCs, including SMICs, will need to appoint at least three FTEs based locally in Ireland. The CBI expects this to apply to the smallest FMCs and increase commensurately in line with:

  • The number of funds
  • The complexity of the fund strategies
  • The assets under management

The CBI has made it clear that the DPs must be locally-based.

For SMICs this guidance is likely to involve additional costs due to time commitments, system infrastructure and additional oversight.

How can we help?

We’ve been providing ManCo services for more than 14 years, so we have the expertise, knowledge and investment in systems and people to make CP86 compliance easier and more cost-effective.

Michael Greaney, Managing Director Link Fund Manager Solutions (Ireland) Limited, noted, ‘As an industry, we have contributed to this guidance in determining what best practise looks like. These efforts will help to build an even stronger industry. It is incumbent upon us to embrace the guidance to ensure that we all look after the interests of our (fund) investors.’

We understand your challenges, so contact us to find out more about how we can help you navigate this complexity and change in the Irish funds market.

Are you making plans for CP86?

Are you a Self-Managed Investment Company (SMIC) making plans for CP86? Meet our Designated Persons.

Our CP86 website has everything you need to know.

Visit our CP86 website to read more about the upcoming deadline, what it means for SMICs and how we can help as your Ireland Management Company.

Ed Hamilton-Russell

Head of Business Development (EMEA)

Tel: +44 (0)7725 628 137

Email me

16Oct2020

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