Service provider oversight is an important area of responsibility for fund boards, but one which competes for airtime in board meetings with a growing list of governance topics. Yet, although the relationships between fund boards and their depositaries, fund accountants and transfer agents can be complex, when handled well, they provide directors with valuable data and insights to inform the board’s decision-making.
Moreover, these is also the potential for increased regulatory scrutiny in this area, as the FCA has been clear that it expects to see evidence that both fund boards and depositaries are holding Authorised Fund Managers’ feet to the fire effectively on behalf of investors.
These, and more, were the topics under discussion at FBC’s Digital Meeting in the summer, in which FBC’s senior adviser, Peter Christmas, set out findings from a detailed study he conducted with executive and independent directors exploring the key considerations for fund boards when it comes to overseeing service providers.
The resulting research note, available here to FBC Corporate Members, sets out directors’ views on the effectiveness of current oversight arrangements, examines how firms are benchmarking their outsourced providers and details the extent to which boards are providing effective guidance to service providers on the type and scope of reporting they wish to receive.
This is clearly a topic that is on the mind of many directors to whom we spoke – both during the course of the research and subsequently – and FBC will be following up with second research note in the coming months looking in more detail at how fund boards can get the most out of their individual relationships with depositaries, transfer agents and fund accountants.
As well as reading the research, FBC Corporate Members can access a recording of the Digital Meeting discussion via the FBC Member Portal. For more information about FBC’s work on Service Provider Oversight or to arrange a more detailed discussion, corporate members can get in touch with Peter Christmas at pchristmas@fundboards.org.
