18 May 2017

ALFI publishes principles for the oversight of financial intermediaries in distribution of funds guidelines

The ALFI has published a set of Principles for the Oversight of Financial Intermediaries in Distribution of Funds, in line with its mission to help members capitalise on industry trends and to encourage professionalism, integrity and quality within the Luxembourg fund industry.

The document was published during Association of the Luxembourg Fund Industry‘s (ALFI) recent Leading Edge conference which focused on the evolving role and responsibilities of investment fund management companies.

Asset managers’ operating models have seen considerable changes in recent years. While ‘traditional’ management companies have developed in conjunction with the growth of the UCITS brand over the past 20 years, the introduction of the Alternative Investment Fund Managers Directive (AIFMD) has led to the emergence of so-called Super Management Companies (‘Super ManCos’) serving both UCITS and Alternative Investment Funds (AIF).

“A number of regulations have imposed additional responsibilities on management companies in recent years, mainly within management and governance and oversight”, says Marc-André Bechet, Director Legal & Tax at ALFI. “It was therefore time for representatives of management companies and of the Luxembourg fund industry to step back and take stock of best practices in that respect.”

Given Luxembourg’s unrivaled position as the leading centre for cross-border fund distribution, providing its members with a set of high-level common principles for the oversight of financial intermediaries in the fund distribution chain is a logical next step for ALFI.

The document covers key areas of financial intermediaries’ oversight: risk assessment of the distribution model, initial due diligence, ongoing due diligence/monitoring, governance of financial intermediaries, and reporting. The document takes a “principles" rather than “rules" based approach, in that it relies upon good judgment rather than prescription.

Press release

Full publication on_ALFI (subscription required)

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