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NEDs to be appointed on the board of Authorised Fund Managers: an update


The deadline for Authorised Fund Managers to comply with the provisions of policy statement 18/8 is September 2019. In this blog, we share an update with our community reflecting information received from our members as well as a catch-up call with the FCA that NEDonBoard held mid-July.



In April 2018, the FCA announced a range of measures to improve fund governance, protect investors and ensure that investors receive value from the investments. One of these measures requires the Board of Authorised Fund Managers (‘AFMs’) to be comprised of a minimum of 2 independent non-executive directors, representing at least 25% of the Board.

To be an effective NED on the Board of AFMs, NEDs will need to demonstrate:

  • a solid understanding of the fund management industry and processes,
  • an in-depth knowledge of investment strategies and asset classes,
  • an appreciation of regulatory rules, directives as well as industry and market trends.

Related posts: NEDs on the boards of Authorised Managed Funds needed


Challenges faced

Based on the universe of UK AFMs and the requirement to appoint at least 2 independent non-executive directors, various organisations estimated that the policy requirements would create about 400 NED roles.

NEDonBoard has reported that executive search firms have been mandated by a handful of AFMs to identify potential candidates to join their boards. AFMs have made limited use of NED-focused jobs boards.


Update from the FCA

The FCA has talked to some AFMs to understand progress in appointing NEDs. In its conversations, the FCA has focused on the outcome and has not explored how AFMs have found candidates that meet the requirements of PS18/8. The process by which candidates are identified is not directly relevant to the regulator, at least as of now, when the policy is being implemented.

The FCA is concerned with compliance with the policy statement, including the appointment of high-quality candidates that demonstrate a high degree of independence. NEDs must be able to challenge the AFMs’ executive teams and bring an independent perspective, notably in performing the value assessment.


Senior Managers & Certification Regime

AFMs are strongly encouraged to appoint independent NEDs on their boards. Chairs of AFMs’ boards are accountable under the Senior Managers & Certification Regime. Scrutiny is both on the AFMs themselves and the individuals accepting the responsibilities and duties as a chair.



NEDonBoard supports the publication of a report by the FCA post-implementation of PS18/8. In 2020, the FCA will review a number of AFMs and the arrangements that have been put in place to comply with requirements. A report presenting some of the findings of the FCA supervision work would be helpful to the industry and NEDs aspiring to be appointed on the board of AFMs.


NEDonBoard had two conversations with the FCA in March and July 2019 to discuss the policy statement 18/8 and progress with compliance ahead of implementation. NEDonBoard is keen to hear from you if you are a NED on the board of AFMs or have taken steps to become one. Please e-mail us at [email protected].


Written by Elise Perraud


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