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ARTICLE · 21 FEBRUARY 2024

Regulatory Focus On Undue Costs In UCITS And AIFs

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Fund management companies ("FMCs") must ensure that undue costs are not being charged to investors in funds that they manage – this is expressly prescribed in (i) the UCITS Regulations; and (ii) AIFMD Level 2.

IrelandFinance and Banking
Stephen Carty
Stephen Carty
Lorna Smith
Lorna Smith
Philip Keegan
Philip Keegan
Alison Gibney
Alison Gibney
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What You Need To Know

Fund management companies ("FMCs") must ensure that undue costs are not being charged to investors in funds that they manage – this is expressly prescribed in (i) the UCITS Regulations; and (ii) AIFMD Level 2.

Ensuring that investors are not being charged undue costs has been an area of regulatory focus for some time for both the Central Bank of Ireland ("Central Bank") and the European Securities Markets Authority ("ESMA").

Key Regulatory Developments

In July 2019, the Central Bank issued a letter to industry on its thematic review of closet indexing by UCITS highlighting the need for FMCs to review the fee structure and charges on all share classes of their funds on an annual basis. See our previous client update Central Bank Closet-Tracker Review: Focus on Transparency and Governance.

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