Central Bank Review of CP86 implementation

The Central Bank commenced phase 2 of its assessment of the implementation by Fund Management Companies of CP86 Fund Management Company Guidance .  For phase 3, the Central Bank will select some Fund Management Companies and some funds for an on-site review meeting. 

Phase 2 focuses on the inspection of three elements:

• the delegation of investment management and the performance of this managerial function
• the delegation of fund risk management and the performance of this managerial function 
• the organisational effectiveness role. 

The Central Bank requested selected Funds and Fund Management Companies to submit specified documentation by 6 September 2019. The requested documentation included: 

• Board documentation (including Organisational Effectiveness) such as minutes, reports, supporting materials, presentations,  questionnaires, details of due diligence, discussion of underperformance of funds
• Processes for new fund launches, policies and procedures, organisational chart, incidents reports, details of delegated persons, organisational effectiveness reports 
• Investment Management function documentation, including appointment documentation, due diligence details,  reports, Key Performance Indicators which trigger escalation to the Board, terms of reference of investment management committees (if applicable), due diligence processes for investments
• Fund Risk Management Function Documentation  including letters of appointment for Designated Person responsible for Fund Risk Management, their role profile, primary responsibilities and bio, the risk management framework/ risk management policy, the risk appetite framework/ risk appetite statement,  the risk register, details of breaches and errors, the Key Performance Indicators which trigger escalation to the Board, reports, terms of reference of the risk committee and reports assessing risk levels relative to risk appetite.

Martina Kelly's speech of October 2018 on implementing CP86 can be found here. The Central Bank's inspection requests give more useful insights into Central Bank expectations on CP86 implementation.