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A survey conducted by the Financial Services team of Moore Stephens highlighted that only half of AIFMs are fully aware of the Annex IV reporting requirements applicable to them and the timetable for submission, with a further 42% being somewhat aware but unsure of the information required. Almost 35% of AIFMs surveyed stated that they were not prepared for the actual reporting process.

Moore Stephens believes that the lack of preparedness highlighted in the results of the survey may be attributed to the lack of guidance provided by the FCA at that time, with firms only able to rely on ESMA guidelines. The regulator has subsequently provided additional information on technical aspects relevant to the new reports and allowed AIFMs a brief window to submit mock returns within a dedicated test environment.

The results also highlighted that 88% of AIFMs surveyed were confident in the ability of their systems to cope with the reporting requirements. Only four per cent of respondents confirmed that they would engage the services of a third party provider, but this could be misleading. Many AIFMs intend to rely on existing outsourcing arrangements with fund administrators and are therefore confident that appropriate reporting systems will be made available to them.

If this is the case, AIFMs must ensure they undertake an appropriate due diligence review and risk assessment of the fund administrator (or other third party provider) in respect of their ability to provide appropriate systems for Annex IV reporting.

Tim West, Partner in Moore Stephens’ Financial Services Team, said: “On the surface these are encouraging results, showing at least that AIFMs are aware that they need to take action. However, now that more detailed technical guidance is available, it is more apparent than ever that Annex IV reporting represents a demanding and time-consuming process. We expect that a large percentage of AIFMs may decide to outsource reporting requirements or seek assistance from third party providers.

“Even under outsourcing arrangements, AIFMs retain full responsibility and liability for their reporting obligations. Failure to submit an accurate and complete report could have severe consequences and AIFMs should ensure they have a clear understanding of the information required and clear oversight of the regulatory reporting process.”

(press release)
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