Coronavirus (COVID-19) Update: FCA Announces Temporary Relief For The Publishing Of Annual And Half-Year Reports And Accounts
Considering the challenges faced by many fund managers and auditors when preparing their financial statements due to the Covid-19 pandemic, the FCA has decided to extend the deadline for submission of annual and half-year reports and accounts. The FCA statement regarding the extension of deadlines can be viewed at the following link: https://www.fca.org.uk/firms/extending-deadlines-publishing-fund-reports-and-accounts
Extra 2 months for annual reports and a month for half-year reports
Under the temporary relief issued by FCA, Authorised Fund Managers (‘AFMs’) of UK UCITS schemes and non-UCITS retail schemes (‘NURS’) who need extra time in preparing their annual reports, will be given an additional 2 months’ period to publish them.
The temporary relief will also allow one extra month for the publishing of half-year reports. The extra time granted will allow fund managers to act on the best interest of their investors and produce accurate reports.
In both cases, firms need to inform the FCA if they intend to use additional time. In addition to this, and if applicable, firms must also communicate any material concerns under Principle 11. The FCA will maintain supervision of the authorised fund sector through data reports and discussions with investment managers.
Using the additional time
Under UCITS Directive, authorised funds and open-ended funds operating as NURS must publish their audited annual accounts and reports within 4 months of their yearly accounting reference date (COLL 4.5.14R). Additionally, AFMs should include in the fund’s annual report a statement setting out their assessment of value, unless the AFM provides the statement in a different report (COLL 4.5.7R).
Nevertheless, firms that are able to publish their reports and accounts within the set timeframe without compromising either the quality of the reports or the existing health guidelines should publish their reports without making use of the additional time.
The FCA will not begin an enforcement action if AFMs publish annual reports and assessment of value reports within 6 months of their year-end accounting date.
Similarly, no enforcement action will be taken if AFMs publish half-year reports within 3 months of the end of their half-yearly accounting period.
This temporary relief is granted under the provisions of the rules in GEN 1.3 (Emergency), which permits appropriate relief to firms that may be unable to comply with a particular rule in the Handbook. GEN 1.3 sets out the various conditions that a temporary relief can be granted.
Actions required by AFMs
AFMs who wish to make use of the additional time should inform the fund’s depositary and auditors and email FCA with the details of the funds that this extension of time will apply and the intended date of publication at email@example.com
AFMs should, before the original publishing date for either an annual report or half-year report, publish a statement on their websites explaining the rationale behind their decision as well as the intended publication date. AFMs should take all reasonable steps to inform the unitholders about the change in the publication date.
Important reminder on breaches
It should be noted that any firm which decides to make use of the additional time granted by this temporary relief would technically be breaching the rules by failing to publish the reports within the usual 2 or 4 month time-frame.
Regardless of the temporary relief, firms would still need to make a record of the breach on their relevant breach registers.
However, these breaches would not be subject to enforcement action by the FCA in the event that firms take the relevant steps as to notify the FCA, mentioned above.
The time-frame of this policy change
The change in this policy is temporary, taking into consideration the Covid-19 pandemic and its consequences. The FCA will continue to review the policy and will publish further information as to how and when it will cease to apply in a fair, orderly, and transparent way.
How we can help: Should you need any guidance or assistance in dealing with issues related to Coronavirus (COVID-19) or matters relating to compliance with FCA or related regulatory matters, please contact:
- Jan Hagen – firstname.lastname@example.org