CP12/32: Implementation of the Alternative ... - BVCA admin

Annex 1
November 2012
CP12/32
Implementation of the Alternative Investment Fund Managers Directive
Cost benefit analysis (CBA)
1. This Annex provides a CBA of the policy proposals outlined in this CP. It is our expectation
that the changes proposed in this CP will be made by the board of the FCA, rather than by
the FSA. As a result, the relevant CBA requirements are those set out in section 138I of the
Bill rather than those in section 155 of the original version of FSMA. 1
2. We consider that this CBA meets the draft revised FSMA CBA requirements. Section 138I
of the revised version of FSMA is currently before Parliament and we will review the CBA
if those requirements change.
3. We only have a legal obligation to publish a CBA for proposed changes to rules contained
in the Handbook. This means that for AIFMD we only have to assess the impacts of the
rules transposing the Directive itself (Level 1). The Level 2 Regulation, on the other hand,
will be directly applicable in the UK and other Member States. To the extent that it does
not require making any changes to the Handbook, we do not have a legal obligation to
assess these impacts in the CBA.
4. In practice, however, it is difficult or sometimes even impossible to separate the cost
impacts that will arise from the Level 1 Directive and the Level 2 Regulation. The Directive
often outlines the high-level principles, but the costs largely arise from the more specific
Level 2 requirements. Because of this we have decided to publish a high-level CBA that
covers both the Directive and the forthcoming Level 2 Regulation, where possible. By doing
this we, however, do not intend to set a precedent for future CBAs on implementation of
EU Directives.
1 The FCA will be required to carry out and publish a CBA when proposing draft rules and when making rules which are significantly
different from the draft consulted on. In particular, they will be required to publish ‘an analysis of the costs together with an analysis
of the benefits…and an estimate of those costs and of those benefits ’. However, if, in a regulator’s opinion, the costs or benefits
cannot reasonably be estimated or it is not reasonably practicable to produce an estimate, an estimate need not be provided; but in
this case, the regulator must explain why it is of that opinion. Finally, no CBA is required if a regulator considers that there will be no
increase in costs or there will be a cost increase of minimal significance.
Financial Services Authority A1:1