Global Trustee and Fiduciary Services News and Views Issue 50

Global Trustee and Fiduciary Services News & Views | Issue 50 | 2018 49 AFMs to act in the best interests of unitholders, and ensure unitholders are treated fairly. Asset managers must publish a report on the assessment of value within four months of the first accounting period ending after 30 September 2019, and annually thereafter, usually within the annual report. Funds with a 30 September accounting year-end will need to be considering the value assessment from October this year. From an SM&CR perspective, the underlying prescribed responsibility to ensure the AFM’s value-for-money assessments, INED representation and acting in investors’ best interests sits with the chair of the governing body function (SMF9). The implementation date of the SM&CR extension to solo regulated firms is 9 December 2019. In the final AMMS rules, in April 2018, the FCA confirmed that whether AFM’s have an independent chair is for the AFM to decide. When the rules were made, it noted there may be good reasons for an AFM to choose either option. However, the FCA will monitor the situation carefully and propose rule amendments if necessary. Many in the fund industry doubt whether these final rules will produce output that clearly enables individuals and firms to compare which products offer the best overall value delivered for investors. However, firms offering products where the overall value delivered may be considered poor are likely to struggle to justify their offering and could be incentivised to reduce fees, improve the quality of service or move investors into better-value share classes. Ireland In Ireland, the governance structure is associated with a director’s fiduciary duty, but no prescribed requirements exist as mandated in the UK through the SM&CR requirements. INEDs are responsible for overseeing the organisational effectiveness of the investment manager — how it is organised and resourced. It’s worth noting that as the CBI looks to increase its emphasis on culture within firms that it regulates, it’s also looking at the prospect of introducing an SM&CR regime similar to the one in the UK. One of the practical benefits noted by the CBI would be to “improve corporate governance”. 4 No timeline has been proposed but this is certainly a development that should be monitored. US The UK SM&CR requirements are similar to those that US mutual fund boards must consider when assessing the investment advisory contract, including any fee, and comprise the: • Nature, extent and quality of the services to be provided by the fund manager. • Investment performance of the fund and the fund manager. • Costs of the services to be provided and profits to be realised by the fund manager and its affiliates.