John Allan, Senior Operations Specialist from the Investment Association, recently joined our Fundipedia quarterly User Group meeting to provide the latest news on regulatory matters as they relate to funds and firms.

In summary the video talks about three main areas:

  1. Data Exchange Templates – as led by industry bodies including FinDatEx
  2. The Common ShareClass Register
  3. Additional policy and regulatory changes on the horizon in 2021


Good morning, everyone. It is a pleasure to be invited to talk to you today at Fundipedia’s User Group. As you know, Fundipedia is a part of IA Engine, our fintech hub and accelerator program, and it has been fantastic to see the progress being made by them and the developing services now being provided to IA members.

My name is John Allan. I’m responsible for policy matters at the Investment Association, such as fund operations, tech policy, and cyber and operational resilience. Today, I’m going to provide a short overview on regulatory matters as they relate to funds and to firms. I’m sorry that I’m not able to join you live today, but I’m very happy to answer any questions that you may have.

My contact details will be shared at the end, or please do direct anything through the Fundipedia team and I’m sure they’ll be happy to direct them on to me if I can help.

Now, I have just three sides today, and I’ll just spend a few minutes going through those regulatory matters.

Data Exchange Templates (01:06)

This first slide lists out the various and growing lists of data exchange templates that are in place across Europe now. I believe that you are well familiar with these, and of course Fundipedia are very involved in this area as well. Now, as you can see, there are quite a number here, all of which have either recently been updated or are going through an update at the current time.

Now, FinDatEx are the organisation that lead on this generally, and the IA and the industry bodies across Europe representing insurers, bankers, and investment firms meet regularly to discuss development ideas and the ways to take those templates forward.

Now, FinDatEx’s mission is to support the development and use of standardised technical templates to facilitate the exchange of data between stakeholders in the application of European financial market legislation.

All of the templates that they produce are voluntary, they’re also free, both in terms of costs and copyright, and intellectual property rights, so you can be confident in being able to use them.

European Feedback Template (EFT), European MiFID Template (EMT) (02:23)

Now, the first two mentioned on the slide here, the European Feedback Template and the European MiFID Template are both owned by the MiFID working group FinDatEx and the EFT version one was issued recently in December.

Now, this template standardises the information to be sent back from the distributor to the manufacturer under the MiFID II target market requirements, and also in December, version three of the EMT became active and all previous versions of this template were withdrawn.

However, upgraded version 3.1 is currently out for consultation, with a view to it going live in March. 3.1 is an interim measure to provide an ESG indicator to all distributors and will be reviewed once the relevant MiFID delegated act amendments are published.

So as such, migration to 3.1 is not mandatory at this time. The changes that have been made compared to version 3 are relatively minor and relate solely to the identification of products aimed at investors with sustainability preferences. The consultation ends on the 25th of January, and we would be pleased to be able to feed back any comments that you might have to FinDatEx on your behalf.

European ESG template (03:41)

Now moving on, FinDatEx is also forming a new ESG working group to create a European ESG template, the EET, which you can see on the screen there. This is to meet the prudential distribution and disclosure needs of insurers, pension schemes, banks, and distributors.

Details on these will follow in due course, and clearly this reflects the popularity of ESG as a data set and general trend within the industry. So do expect to hear more on this over the next few months as it develops.

Solvency II Tri-Partite (04:12)

The fourth template on the list here is the Tri-Partite Template relating to Solvency II. Updated version 5 took effect from March last year, and any firms still using the old versions, 3 and 4, need to upgrade to 5 by the end of this month, as their validity expires with the last 2020 reporting happening now in January, so shouldn’t be used from February onwards.

FinDatEx did upgrade version 5 a few weeks ago with a very minor update to one field, and it was seen as so minor that it wasn’t even significant enough to be named version 5.1.

Details of this are on the IA website at the address on the screen, so please look out if you haven’t seen it. By the way, I wish the link on the screen there was a bit less complicated, so apologies for that.

European PRIIPs Template (EPT) (05:11)

And the last template to cover on this section is the EPT, which covers PRIIPs, however there’s currently an impasse and the revised regulatory technical standards that are needed to really take that forward are currently outstanding. So the working group will consider changes to the EPT in due course.

You can stay up to date with news on all of these templates via the webpage that’s there, or of course by signing up to Investment Association circas. We would love to hear from you on any of these, so please do get in touch if you would like to.

 Common Shareclass Register  (05:46)

The next thing that I wanted to touch on was the Common Shareclass Register. This is a new development piece of work that we are doing on behalf of our members, but really to help investment platforms. The register is currently under development following a request last year by the wider funds industry in order to assist compliance with new rules around share class conversions and transfers from the FCA that come into effect on the 1st of February.

Now, those rules require platforms to do many things, two of which are specifically relevant to investment firms.

First, platforms should offer customers the choice to transfer their investment funds in specie where those funds are common to both platforms. Whereas currently in several cases that is preferred to be done in cash.

And secondly, if a conversion of unit class is necessary in order to go to facilitate that, then platforms need to do that conversion.

So the idea behind the register then is to help facilitate transfers by providing details of the class that is commonly available in the retail market and accessible via platforms, and essentially is the common class through which all platforms would be able to access the fund. A conversion can then take place through the share class that’s been listed on the register.

So IA members are currently in the process of validating the content of the register, and the website and the address that’s on your screen there contains the current draft. Now, we’re going to be updating and publishing a new draft register this very Friday and the final live version will be shown there by the end of the month, before the new rules come into effect.

So I’m pleased to say that the website name there is much simpler,, so please do have a look when you get a chance, and importantly if the data for your firm is showing unverified on that register then please do get in touch as soon as possible so that we can get that updated.

Looking ahead to 2021 (08:11)

Now, my final slide is a look ahead at the regulatory environment and what might be in store for investment firms in 2021. As you can see, the regulatory activity and change keeps on coming, and this year there are some significant items on the list.


So we’ll start at the top, the European Commission’s review of the AIFMD is currently active. The IA’s draft response to its consultation notes that the AIFMD is now embedded in industry and working well, has largely achieved its objectives, and as such the IA sees no need to reopen it.

A key focus at the moment is on the questions of delegation, which impacts a significant portfolio management activity carried out in the UK, and our draft response also considers a number of other aspects of AIFMD review, in particular the sections on macroprudential, which focuses on liquidity management, reporting, leverage, and sustainability.

Our response also rejects the proposal to merge the AIFMD and UCITS EU rulebooks.

Now, you may well have noticed that the UK is no longer a part of the EU, however many of our members will continue to act as delegates of AIFMs and/or operate subsidiary AIFMs in the EU, and therefore we do have an interest in the continued overall efficient and effective operation of the AIFMD.

HMT Future Regulatory Framework Review

The IA is currently requesting views on the first draft response to HM Treasury’s phase two Future Regulatory Framework Review.

The review aims to see how the UK can diverge from EU laws in the future and what the future regulatory architecture should be.

Now, as part of our response, we are looking to modernise the regulatory system to be more efficient and economical, and clarifying the feedback mechanism that should exist to prevent issues such as some of the concerns around the financial services compensation scheme levy from happening in the future.

I am running out of time now, but lots to say on fund liquidity, so I’ll try and be brief on that.

Liquidity mismatch / measurement & LTAF

So the Bank of England and FCA’s joint work on liquidity mismatch in investment funds continues. In its December 2020 financial stability report, the Bank referred to the FCA’s proposals to introduce notice periods on authorised property funds.

The FCA considered that from a financial stability point of view, it would be beneficial to extend notice periods in property funds to the 90 to 180 days proposed by the FCA or even beyond that.

The report acknowledged that further work is now needed by the funds ecosystem to be able to ensure that the investments could continue into funds with longer notice periods, and the IA expects that its final conclusions will be published in the next few months.

Now, to help firms and demonstrate consistency of approach to regulators, the IA established the fund Liquidity Management Working Group in 2019.

Their goal was to revisit current IA guidance and best practice materials for investment managers on managing liquidity in investment funds. That working group has also revisited previous work on the liquidity toolkit and explored methods of disclosure of a fund’s liquidity in a way that investors can understand.

Liquidity papers and guidance issued by regulators and other industry bodies have been reviewed during the exercise to ensure alignment with those. Now, the draft of the new guidance and best practice has been completed, subject to any amendments that may be necessary as a result of the final conclusions of the bank and the FCA’s work, which as I say are expected very soon.

The working group met with the Bank of England and the FCA early last year to discuss the joint work, and the FCA and the Bank strongly encouraged input from the group in their work, particularly on the use of liquidity tools and the measurement of a fund’s liquidity.

After publication of the final conclusions, the draft guidance will be reviewed to ensure it’s in line with those conclusions, and we will circulate it to members.

Now, on the LTAF, as part of the liquidity work, the July of 2019 UK Funds Regime Working Group filed a report which was presented to treasury, contained a proposal for an LTAF.

In November 2020, the chancellor, Rishi Sunak, announced HMT’s commitment to the LTAF, with the first products expected to be available later this year.  It is expected that the FCA will launch a consultation shortly and a policy statement with final laws applying to it in late summer.

I have definitely run out of time now, so it is time to wrap up. I would just highlight a couple of other points. 

FinTech Strategic Review and Operational Resilience

So do look out for the publication of the government’s fintech strategic review very soon, and if you aren’t aware of the work on operational resilience or the transition away from LIBOR, then you’re certainly running out of time so please do get in touch on those if you need any help.

So here are my contact details. It’s been a pleasure talking to you today, and if you would like to get involved in any of the work on any of these topics, please do let us know. If you have any questions, also please get in touch. Thank you for listening and goodbye for now.