Extending deadlines to publishing fund reports and accounts

We are giving firms extra time to produce their annual and half-yearly reports and accounts because of the impact of coronavirus (Covid-19).

Fund managers and auditors face unparalleled challenges in preparing financial information as a result of the coronavirus (Covid-19) pandemic. These challenges are largely operational, particularly the need to engage a large number of internal and external parties.

While most of these parties will be able to work remotely, it is likely that the Covid-19 restrictions currently in place will significantly slow the process down and impede managers’ ability to meet the regulatory deadlines. In response, we are announcing a temporary relief to the regulatory deadlines for publishing funds’ half-yearly and annual reports and accounts.

We note that ESMA has also recently issued a statement in relation to the publication of fund reports. The statement encourages national competent authorities to apply a risk-based approach and act in a proportionate manner in the exercise of supervisory powers in their day-to-day enforcement of the regulatory deadlines that apply to the production of fund reports.

Extra 2 months for annual reports

Where the authorised fund managers (AFMs) of UK UCITS schemes and non-UCITS retail schemes (NURS) need extra time to complete their fund’s annual reports, this temporary relief will permit an additional 2 months to publish them. In addition to AFMs of NURS, this relief is also available to managers of other forms of alternative investment funds (AIFs).

Fund managers that want to take advantage of this forbearance need to let us know and take the steps set out below.

Extra month for half-yearly reports

In relation to half-yearly reports for UCITS schemes and NURS, the relief permits 1 extra month to publish. Again, AFMs need to inform us if they are using this extension and take the steps set out below.

This will help fund managers to be transparent with investors, as the extra time will ensure that they can produce reports that are accurate. We expect fund managers to continue to uphold the best interests of their investors at all times.

We expect firms to contact us, when appropriate, to communicate issues of material concern under Principle 11. Fund managers are expected to work closely with the fund’s depositary (where one is required) and ensure that decisions are made in line with good standards of governance. We maintain oversight of the asset management sector through regular data reports and dialogue with investment managers.

Existing timeframes

Fund managers have obligations under our rules, and (where applicable) certain EU Regulations, to publish annual reports, assessment of value reports and half-yearly reports within certain timeframes. Without the temporary relief, fund managers would be required to publish annual reports, assessment of value reports and half-yearly reports as set out below:

  Annual report Assessment of Value reports Half-yearly report
AFM of UK UCITS scheme Within 4 months of fund’s accounting year-end date Within 4 months of fund’s accounting year-end date Within 2 months of the end of the half-yearly accounting period
AFM of NURS As above for UCITS As above for UCITS As above for UCITS
AFM of QIS Within 6 months of end of fund’s accounting or financial year Within 6 months of end of fund’s accounting or financial year Within a reasonable time after the end of each relevant accounting period
AIFM of a EuSEF or EuVECA established in the UK Within 6 months of the end of the fund’s accounting or financial year N/A N/A
Full-scope UK AIFM of any other UK or EEA AIF, or non-EEA AIF marketed in the UK Within 6 months of the end of the fund’s accounting or financial year N/A N/A

We expect fund managers to publish reports on time, if they can publish within the usual time limits without compromising the quality of the reporting and in line with the current health guidelines.

Nevertheless, the Covid-19 pandemic presents operational challenges for fund managers and their funds’ reporting processes, and we understand that these challenges may make it harder to prepare annual and half-yearly reports. As a result, we are offering the temporary relief described below.

Temporary relief

We will allow flexibility in relation to the time limits specified in the rules and requirements that are set out below provided fund managers produce the relevant reports within the timeframes set out in the following table:

  Annual report Assessment of Value reports Half-yearly report
AFM of UK UCITS scheme Within 6 months of fund’s accounting year-end date Within 6 months of fund’s accounting year-end date Within 3 months of the end of the half-yearly accounting period
AFM of NURS As above for UCITS As above for UCITS As above for UCITS
AFM of QIS Within 8 months of end of fund’s accounting or financial year Within 8 months of end of fund’s accounting or financial year No change
AIFM of a EuSEF or EuVECA established in the UK Within 8 months of the end of the fund’s accounting or financial year N/A N/A
Full-scope UK AIFM of any other UK or EEA AIF, or non-EEA AIF marketed in the UK Within 8 months of the end of the fund’s accounting or financial year N/A N/A

What fund managers need to do

Fund managers that wish to use the additional time should:

  • promptly inform the fund’s depositary (where one is required) and auditors; and
  • email [email protected] with details of the funds for which they intend to make use of the relief, and the intended new date of publication of reports for each fund

Fund managers should publish a prominent statement on their website, no later than the original publishing date of the annual or half-yearly report, explaining the reasons for their decision and giving the revised publication date. Fund managers should consider what other steps they could take to bring the deferred publication date to the attention of unitholders.

Policy details

The temporary relief applies in respect of the time limits for producing the relevant reports which are specified in the rules and other requirements set out in the table below:

  Annual report Assessment of Value reports Half-yearly report
AFM of UK UCITS scheme COLL 4.5.14R COLL 4.5.14R and COLL 4.5.7R(8)), and in relation to composite reports, COLL 4.5.7R(9) COLL 4.5.14R
AFM of NURS As above for UCITS As above for UCITS As above for UCITS
AFM of QIS COLL 8.3.5R as modified by FUND 3.3.3R COLL 8.3.5R (as modified by FUND 3.3.3R) and COLL 8.3.5AR(5), and in relation to composite reports, COLL 8.3.5AR(6) N/A
AIFM of a EuSEF or EuVECA established in the UK Article 12 of the EU EuVECA Regulation and Article 13 of the EU EuSEF Regulation respectively N/A N/A
Full-scope UK AIFM of any other UK or EEA AIF, or non-EEA AIF marketed in the UK

FUND 3.3.2R and FUND 3.3.3R

(FUND 3.3.3R is subject to the specific requirements which apply under the Transparency Directive and the separate rules applying to AFMs of NURS (see above)

N/A N/A

This temporary relief is without prejudice to the application of the rules in GEN 1.3 (Emergency) which can provide temporary relief from rules where compliance with the rule is impracticable for the firm. The temporary relief provided by the rules is subject to various conditions which are set out in GEN 1.3.

How long this temporary policy will last

This policy is intended to be temporary while the UK faces the extreme disruption of the Covid-19 pandemic and its aftermath. We will keep its application under review. When the disruption abates, we will announce how we will end the policy in a fair, orderly and transparent way.

Questions and answers

Which fund managers and funds does this temporary relief apply to?

This relief applies to AFMs of UK UCITS schemes, non-UCITS retail schemes (NURS), and QIS, AIFMs of EuSEFs and EuVECAs that are established in the UK, and full-scope UK AIFMs of other UK and EEA AIFs as well as non-EEA AIFs that they market in the UK.

See the tables under the Temporary relief and Policy details sections above for further details.

Do firms/funds have to use this temporary relief?

No. Fund managers should make every effort to publish within the usual time limits where they can without compromising the quality of the reporting and in line with the health guidelines to contain the spread of Covid-19.

Which FCA rules does the temporary relief apply to?

See the Policy details section above.

Does the temporary relief also apply to requirements to produce half-yearly and annual reports under applicable rules in other countries?

No. A fund manager with concerns about its ability to comply with any such requirements should raise these with the relevant national competent authority. A fund manager that intends to raise concerns about its ability to comply with the timing requirements for producing annual reports may find it helpful to refer to ESMA’s statement on ‘Actions to mitigate the impact of COVID-19 on the deadlines for the publication of periodic reports by fund managers’ when doing so.

Does the temporary relief affect the duties and obligations that a fund/fund manager has to unitholders or investors under FCA rules or fund documentation (eg prospectus and instrument)?

No, and we encourage firms to contact unitholders/investors in the funds they manage to explain the publishing delay. In particular, we do not envisage any change to the dates on which distributions are to be made for classes of units that distribute income.

Will the temporary relief be extended if the UK government introduces further measures to contain Covid-19?

We will continue to review the appropriateness of the length of the temporary relief.

What do firms need to do to make use of the temporary relief?

See the What fund managers need to do section above.

Can firms delay publishing their assessment of value reports?

As a key remedy following our asset management market study, we expect AFMs to complete assessments of value and to publish them within usual time limits where this can be done without compromising the quality of the assessments or the reporting and in line with health guidelines to contain the spread of Covid-19.

If AFMs need to make use of the temporary relief in relation to publication of annual reports described above, this relief would also extend to their obligations to publish the statement on the assessment of value, whether it is contained in the annual long report or a composite report under COLL 4.5.7R(9) or, where applicable, under COLL 8.3.5AR(6).

During this time we expect AFMs to maintain high standards of governance on assessing value process and to continue to work on reports to ensure they are ready for publication in line with the annual report and accounts.

How are these measures being achieved?

This is not a waiver or rule change. We can exercise forbearance in circumstances where we deem it appropriate.

Who should I contact if I have questions?

Email [email protected] providing details of the funds this will apply to.

If you have any questions, please speak to your firm supervisor in the first instance; otherwise please contact [email protected].