Two-thirds of alternative fund managers hit by governance fines or sanctions
A raft of fines and sanctions over the past two years has driven alternative fund managers to ramp up governance, according to research by compliance experts Bovill Newgate and fund administrator Ocorian.
The research found more than two thirds of the fund managers surveyed (65 per cent) had been subject to governance-related fines or sanctions in the last two years. A further 12 per cent said they had received an information request or visit from the regulator in the last two years.
This was despite 99 per cent of them saying the board and senior management at their firm already take governance seriously.
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The alternative fund managers surveyed collectively manage around $132.25bn (£103.4bn) of assets under management. Of those, 54 per cent said they take governance very seriously. Almost all (93% per cent) said the board and senior management already have the required skills to conduct its duties and have effective roles in place to mitigate governance risks.
The international study also found that, while 70 per cent said their organisation had already increased its focus on governance during the past two years, several contributing factors including the numbers of governance related fines and sanctions had led to more than nine in ten (90 per cent) saying they expect that to increase over the next 24 months. Of these, almost a third (30 per cent) said it will increase dramatically.
Almost all (96 per cent) said it’s important for their organisation to use an independent specialist risk and compliance company. More than half (55 per cent) said it’s very important and only 4 per cent said it’s not important.
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“The alternative fund managers we surveyed have always taken governance extremely seriously, but the regulatory landscape is constantly changing and becoming even more complex, particularly for the global firms,” said Bovill Newgate head of regulatory and governance Paul Ford.
“For almost all firms, the survey demonstrated the importance to use an independent specialist risk and compliance company. An independent company not only brings specialist skills and experience that is very difficult and time consuming to recruit to in-house, but also technology, software and processes to manage complex frameworks and structures.”
Ford went on to outline Ocorian’s three lines of defence approach to protect asset manager’s businesses. This was to first, implement robust procedures, policies and training; second, comprehensively monitor these; and finally, review and challenge through independent audit.
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