On Thursday, 10 October, the City of London Law Society (a trade body for City solicitors) published a letter dated 23 September accusing the FCA of gold-plating (or at least misinterpreting) the AIFMD (Alternative Investment Fund Managers Directive).
The dispute surrounds the date by which firms must be AIFMD-compliant. In its interpretation of the Directive, the FCA has said that firms must be authorised/registered by 22 July 2014. In practice, given the time it takes the FCA to process an application, this means that firms must be compliant 3-6 months prior to the deadline.
However, as the CLLS point out, the actual wording of the Directive states that firms ‘shall submit an application for authorisation’ within one year of 22 July 2013. Therefore, in the CLLS’ opinion, firms should be able to continue to operate even after July 2014, provided that they have submitted the necessary application in time. Following this interpretation, the FCA’s position amounts to a gold-plating of the Directive and therefore should properly have been flagged-up during consultation.
The FCA has yet to respond publicly to the letter, but even if they do not agree to the CLLS’ demands, firms may have a last resort in the European Commission: Though the CLLS’ letter makes no mention of it, the EU Commission has the power to ask the Court of Justice to compel the FCA to apply the Directive in a manner consistent with other Member States, whose approach affirms the CLLS’ interpretation. Therefore, even if the FCA doesn’t back down over the deadline, the gauntlet may be taken up by the legal institutions of the EU.
What does all this mean for firms implementing the AIFMD now? It seems unlikely that the 22 July 2014 deadline will slip again at this late stage, and firms would be ill-advised to suspend implementation while they wait for the outcome of the CLLS’ complaint. However, should implementation prove impossible before the deadline, firms may take comfort in the fact that enforcement may be difficult for the FCA.