Fund Management
FCA Authorisation
Specialist regulatory support for Alternative Investment Fund Managers (AIFMs), UCITS operators, and fund management firms operating collective investment schemes.
Fund Management Regulatory Landscape
The fund management sector encompasses Alternative Investment Fund Managers (AIFMs) managing hedge funds, private equity, real estate funds, and other alternative strategies, as well as UCITS operators managing retail investment funds and collective investment schemes.
FCA regulation of fund managers operates under two principal frameworks: the Alternative Investment Fund Managers Directive (AIFMD) for alternative funds, and the UCITS Directive for retail funds. Both impose rigorous requirements on governance, risk management, valuation, and investor protection.
Successfully navigating authorisation requires demonstrating sophisticated investment management capabilities, robust risk and compliance frameworks, appropriate capital resources, and comprehensive operational infrastructure including fund administration and depositary arrangements.
Typical Services
- Alternative Investment Fund (AIF) management
- UCITS management company operations
- Hedge fund and long/short equity strategies
- Private equity and venture capital funds
- Real estate and property fund management
- Fund administration and depositary services
How We Support Fund Managers
- Fund structure selection (AIF vs UCITS, domicile)
- AIFM vs sub-threshold analysis and permissions scoping
- Depositary selection and appointment support
- Administrator and service provider selection
- Capital requirements calculation and planning
- Senior Manager and governance structure design
- Complete Connect application for AIFM/UCITS authorisation
- Programme of Operations and business plan
- Risk management and valuation frameworks
- Depositary and delegation agreements
- Compliance manuals covering AIFMD/UCITS/FUND
- Financial projections and capital adequacy modeling
- FCA queries and technical clarifications
- Senior Manager interview preparation
- Fund authorisation applications (if required)
- Conditional approval requirements delivery
- Launch and operational readiness support
- Ongoing compliance advisory and regulatory reporting
Required FCA Permissions
Fund management firms require permissions aligned with AIFMD and UCITS regulatory frameworks.
Managing an AIF
Managing Alternative Investment Funds including hedge funds, private equity, real estate, and other alternative strategies.
- AIFMD compliance
- Risk management
- Valuation procedures
- Investor reporting
Operating a UCITS
Operating UCITS funds that can be marketed across the EU, subject to strict investment restrictions and investor protections.
- UCITS eligibility rules
- Diversification limits
- Liquidity management
- Daily NAV calculation
Acting as a Depositary
Safekeeping fund assets, cash monitoring, and oversight of the fund manager's compliance with regulations.
- Asset segregation
- Reconciliation
- Oversight function
- Liability for losses
Establishing, Operating or Winding Up a CIS
Establishing, operating, or winding up collective investment schemes in the UK.
- Fund structuring
- Constitutional documents
- Regulatory approval
- Wind-down procedures
Managing Investments (Full-Scope AIFM)
Full-scope AIFM permission for managers with AUM exceeding €100m or €500m (unleveraged, closed-ended).
- Capital: €125k + 0.02% AUM
- Remuneration policies
- AIFM Directive compliance
- Regulatory reporting
Fund Administration
Providing administrative services including NAV calculation, registry, transfer agency, and reporting for funds.
- Operational infrastructure
- Fund accounting systems
- Registry and transfer agency
- Reporting capabilities
Permissions & scope
Which regulated activities the firm will carry on, and the exact permissions that follow from them. Everything downstream is scoped to this, so a permission asked for loosely is a business plan and a set of controls built against the wrong thing.
Business model
What the firm does, who for, and how it earns. The FCA tests whether the model is viable and whether the permissions being requested actually match it, rather than reading the two documents separately.
Governance & SM&CR
Who is accountable for what, and whether they are fit and proper for it. Senior manager responsibilities have to be mapped to named people and evidenced, not asserted in a paragraph.
Policies & controls
The procedures that make the model work in practice, and evidence they are followed rather than filed. A policy the firm cannot show operating is the most common gap at the gateway.
Financial resources
Capital, projections and an orderly wind-down. The figures have to agree with the business model rather than sit beside it, and the wind-down plan has to be costed.
Key Regulatory Requirements
Fund managers must demonstrate compliance with AIFMD, UCITS, and FUND regulatory frameworks.
AIFMD (Alternative Investment Fund Managers Directive)
- Organisational requirements and governance structures
- Conflicts of interest management and disclosure
- Risk management systems and liquidity management
- Valuation procedures and independent valuation
- Remuneration policies aligned with risk and performance
- Delegation and outsourcing oversight frameworks
- Annual reports and periodic disclosure to investors
- Depositary appointment and oversight
UCITS Directive Requirements
- Eligible assets and investment restrictions compliance
- Risk diversification and concentration limits
- Borrowing restrictions (max 10% of fund NAV)
- Daily liquidity and redemption capability
- Use of derivatives for efficient portfolio management
- Independent depositary with oversight function
- Key Investor Information Document (KIID) preparation
- Passporting across EU member states (where applicable)
FUND Sourcebook Compliance
- Constitution and structure of authorised funds
- Pricing and dealing requirements
- Custody and safekeeping of scheme property
- Investment and borrowing powers
- Valuation and pricing methodologies
- Income allocation and distribution
- Reports and accounts to investors
- Changes to funds and scheme particulars
Governance and Oversight
- Effective board composition including independent directors
- Senior Manager regime (SMF) allocations and responsibilities
- Three lines of defence model implementation
- Risk management function independent from portfolio management
- Compliance oversight function (SMF16)
- Internal audit for full-scope AIFMs
- Management body diversity and expertise requirements
Valuation and NAV Calculation
- Independent valuation function or external valuator
- Valuation policies and methodologies documentation
- Fair value determination for illiquid or complex assets
- NAV calculation frequency (daily for UCITS, periodic for AIFs)
- Pricing errors and NAV correction procedures
- Oversight and validation of third-party pricing sources
- Audit trail and documentation of valuation decisions
Capital Requirements and Financial Resources
- Full-scope AIFM: €125,000 plus 0.02% of AUM over €250m
- Small registered UK AIFM: lower thresholds if sub-threshold
- UCITS management company: €125,000 base capital
- Professional Indemnity Insurance covering potential liabilities
- Additional own funds for asset management activities
- Quarterly capital adequacy reporting and monitoring
- Wind-down planning and financial stress testing
Common Authorisation Challenges
Issues we frequently help fund management firms navigate during the FCA application process.
Depositary Arrangements
Appointing and contracting with an appropriate depositary is mandatory for AIFMs and UCITS. We help identify suitable depositaries, negotiate agreements, and document oversight arrangements that satisfy regulatory requirements.
Valuation Framework
Independent valuation is a critical AIFMD/UCITS requirement. We design comprehensive valuation policies, implement independent valuation functions, and establish procedures for fair value determination of complex or illiquid assets.
Capital Adequacy Calculation
Calculating own funds requirements for full-scope AIFMs involves complex formulas based on AUM. We model capital needs, ensure sufficient resources are committed, and implement ongoing monitoring and reporting processes.
Delegation and Outsourcing
AIFMD permits delegation but requires robust oversight. We establish delegation frameworks, due diligence processes, service level agreements, and monitoring arrangements that maintain regulatory accountability.
Risk Management Function
AIFMD and UCITS require independent risk management functions. We help structure appropriate governance, design risk frameworks covering market, liquidity, and operational risks, and implement risk monitoring systems.
Regulatory Reporting
Fund managers face extensive reporting obligations including Annex IV returns, investor disclosures, and periodic reports. We implement reporting frameworks, select appropriate systems, and ensure timely, accurate submissions.
Frequently Asked Questions
How do fund managers arrange depositary requirements?
Appointing and contracting with an appropriate depositary is mandatory for AIFMs and UCITS. We help identify suitable depositaries, negotiate agreements, and document oversight arrangements that satisfy regulatory requirements.
How do you design a valuation framework for fund managers?
Independent valuation is a critical AIFMD/UCITS requirement. We design comprehensive valuation policies, implement independent valuation functions, and establish procedures for fair value determination of complex or illiquid assets.
How are capital adequacy requirements calculated for AIFMs?
Calculating own funds requirements for full-scope AIFMs involves complex formulas based on AUM. We model capital needs, ensure sufficient resources are committed, and implement ongoing monitoring and reporting processes.
How do fund managers handle delegation and outsourcing under AIFMD?
AIFMD permits delegation but requires robust oversight. We establish delegation frameworks, due diligence processes, service level agreements, and monitoring arrangements that maintain regulatory accountability.
What risk management function do fund managers need?
AIFMD and UCITS require independent risk management functions. We help structure appropriate governance, design risk frameworks covering market, liquidity, and operational risks, and implement risk monitoring systems.
What regulatory reporting do fund managers need?
Fund managers face extensive reporting obligations including Annex IV returns, investor disclosures, and periodic reports. We implement reporting frameworks, select appropriate systems, and ensure timely, accurate submissions.
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Speak with our fund management regulatory specialists to discuss your AIFM or UCITS authorisation.
Phone: 0330 133 0811
Email: contact@memaconsultants.com