Handling growing regulatory burdens for Private Equity firms

With multiple new regulations coming into play, as well as existing governance being stepped up, asset managers have a lot of work to do when it comes to appeasing the regulator and fulfilling their own due diligence reporting requirements. This is particularly difficult for smaller asset managers, who typically don’t have an in-house compliance function, or where compliance is being handled by the COO or CFO.

An outsourced provider such as TiG can support the implementation of regulations and governance, acting as a chief compliance officer where there isn’t one within the firm. In this capacity we can provide tailored advice, proportionate to the size and activities of the clients we work with.

The changing regulatory landscape

The current regulatory landscape for private capital fund managers has changed over the last few years. There have been multiple new regulations that people have had to get to grips with, and now firms must implement best practice for ongoing monitoring. The new regulations are very complex, but there’s also a growing focus on governance and personal liability. Take SMCR (senior managers and certification regime) as an example, following the move to include all financial services at the end of 2019. There is more focus on individual accountability; the regulator wants to know who is ultimately responsible.

Asset managers now have to make the decision whether to go fully compliant with belt and braces, or take a risk based approach and put in place a risk-based defensible position. Those firms taking a light touch approach won’t be ready for the impact of all the new regulations. All the new regulations including SMCR are very heavy on process across all areas of the business, from HR to IT, so firms have to be fully prepared for that.

The regulator expects firms to be continuously looking at their approach and constantly reviewing it so it can be optimised. It’s no longer a simple box ticking exercise that can be completed and forgotten about until the following year. Compliance professionals need to keep the regulations on their agenda and incorporate the necessities into the culture of the firm. Part of that includes keeping the whole senior management up to date and reporting any fines or investigations that occur in other firms off the back of regulations.

TiG Data Intelligence have a long and successful history of working with asset managers and alternative investment funds. We can help firms to get started with the regulations they need, along with maintaining requirements for reporting and providing ongoing advice. Take a look at our alternative investment page for more information.

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