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

Annex 1
November 2012
CP12/32
Implementation of the Alternative Investment Fund Managers Directive
Table 3: Incremental costs to firms from operational requirements
Requirement Incremental costs
One-off Ongoing (annual)
Compliance function £0 – £29,000 £0 – £400,000
Internal audit function £0 – £26,000 £0 – £125,000
Suitable electronic systems for
recording of transactions and
subscriptions
£0 – £29,000 £0 – £103,000
Accounting policies and procedures £0 – £29,000 £0 – £135,000
Due diligence £0 – £22,000 £0 – £70,000
Appointment of counterparties and
prime brokers
£0 – £153,000 £0 – £55,000
Fair treatment of investors £0 – £22,000 £0 – £35,000
Risk management £0 – £159,000 £0 – £200,000
Conflicts of interest £0 – £11,000 £0 – £35,000
Total £0 – £480,000 £0 – £1,158,000
Delegation requirements
23. The Directive will impose standards for delegates and sub-delegates, as well as requiring
reviews and monitoring by AIFMs. 8 AIFMs will have to seek prior approval from the FCA
if they intend to delegate functions to third parties to carry out on their behalf. The AIFM
will also have to review the services provided by each delegate on an ongoing basis.
24. Evidence from the FSA firm survey suggests that AIFMs are likely to incur incremental
compliance costs (Table 4). Costs and impacts, however, will depend on what functions
will be affected by the requirements in the forthcoming Level 2 Regulation.
25. Respondents to the Deloitte survey listed delegation as one of the most pressing concerns
from a cost perspective. If the Level 2 Regulation sets a limit on the tasks that the AIFM
can delegate that is more stringent than the current firm practice, firms may need to
change business models. As Deloitte also notes, some internally managed funds may need
to ‘insource’ functions that are currently delegated.
8 Article 20 AIFMD.
Financial Services Authority A1:7