• Two thirds (65%) of alternative fund managers admit being subject to governance related fines or sanctions during the last two years
• Ocorian’s global research shows nine in ten (90%) see their organisation’s focus on governance increasing over the next 24 months

New research* from market leading regulatory and compliance experts Bovill Newgate in partnership with Ocorian, market leader in services for funds, corporates, capital markets and private clients, reveals that despite saying they take governance extremely seriously and have the right skills at the most senior level, a raft of fines and sanctions in the last two years and other contributing factors is driving alternative fund managers to significantly step up their focus on governance over the next 24 months. 

Almost all (99%) senior leaders and senior compliance and risk executives surveyed at alternative fund manager firms which collectively manage around US$132.25 billion AUM, say the board and senior management at their firm already take governance seriously – with 54% saying they take it very seriously. Almost all (93%) say the board and senior management already have the required blend of skills to conduct its duties correctly and have effective roles in place to manage and mitigate governance risks. 

However, the international study by Bovill Newgate and Ocorian, reveals that despite this more than two thirds (65%) have been subject to governance related fines or sanctions in the last two years. A further 12% have received an information request or visit from the regulator in the last two years. 

While 70% say their organisation has already increased its focus on governance during the past two years, a number of contributing factors including the numbers of governance related fines and sanctions has led to more than nine in ten (90%) saying that they see the focus their organisation places on governance increasing over the next 24 months. Of these, almost a third (30%) say this will increase dramatically. 

There are many ways in which this increase in focus can be achieved but of those surveyed, almost all (96%) say it’s important for their organisation to use an independent specialist risk and compliance company. Over half (55%) say it’s very important and only 4% say it’s not important. 

Paul Ford, Head of Regulatory and Governance, at Bovill Newgate, said: “The alternative fund managers we surveyed have always taken governance extremely seriously, but the regulatory landscape is constantly changing and becoming even more complex, particularly for the global firms. 

“For almost all firms, the survey demonstrated the importance to use an independent specialist risk and compliance company. An independent company not only brings specialist skills and experience that is very difficult and time consuming to recruit to in-house, but also technology, software and processes to manage complex frameworks and structures.”

 “As alternative fund managers and other clients look to increase their focus on governance, we recommend following a three lines of defence approach to protect their businesses – firstly, implement robust procedures, policies and training; secondly, comprehensively monitor these; and finally, review and challenge through independent audit.”

Ocorian’s three lines of defence approach to tackle risk and compliance challenges:

• Line one: create clear and robust frontline processes and procedures, supplementing this with both online and face to face training programmes for staff.
• Line two: build and empower a comprehensive compliance oversight function which monitors and assesses the processes and procedures, as well as advising and supporting staff and senior managers to comply with the firm’s obligations.
• Line three: seek review and challenge of the firms AML framework via annual independent audits.

About Bovill Newgate, an Ocorian company 

Bovill-Newgate is an Ocorian company and specialist financial services regulatory consultancy with a global offering across the UK, the Channel Islands, Singapore, Hong Kong, Mauritius, and the Americas. The firm helps its clients meet complex and evolving regulatory obligations, providing certainty and peace of mind. Its clients are firms of every size across the financial services sector. Bovill Newgate supports its clients in managing regulatory change and dealing with regulatory scrutiny. Providing advice on regulatory change and preventing financial crime, applications to regulators, building or enhancing regulatory frameworks, conducting compliance investigations or diagnostics, training and fulfilling prescribed roles Bovill Newgate have experts based across all the world’s key financial centres who operate globally, acting as one team. 

Please note the above is intended to provide a very general overview of the matters to which it relates and is provided for your convenience. It is not intended as legal or investment advice and should not be relied on as such.

*Bovill Newgate and Ocorian commissioned independent research company PureProfile to conduct a global study (across the US, UK, Germany, Brazil, Singapore, Hong Kong, UAE, Turkey, Quatar, Saudi Arabia and Mauritius) of 101 senior executives, regulation and compliance executives working at alternative fund manager firms (including private equity, venture capital, real estate, infrastructure, private debt, renewables and hedge funds) during January 2024. 

About Bovill Newgate 

Bovill Newgate is an Ocorian company and specialist financial services regulatory consultancy with a multi-jurisdictional offering across the UK, the Channel Islands, Singapore, Hong Kong, Mauritius, and the Americas.  

The firm helps its clients meet complex and evolving regulatory obligations, providing certainty and peace of mind. Its clients are firms of every size across the financial services sector. Bovill-Newgate supports its clients in managing regulatory change and dealing with regulatory scrutiny. Providing advice on regulatory change and preventing financial crime, applications to regulators, building or enhancing regulatory frameworks, conducting compliance investigations or diagnostics, training and fulfilling prescribed roles, Bovill Newgate have experts based across the world’s key financial centres who operate globally, acting as one team. To find out more, please visit www.bovill-newgate.com  

About Ocorian

Ocorian is a global leader in fund services, corporate and trust services, capital markets, and regulatory and compliance support. 

Unlocking new value for its clients across jurisdictions and service lines is Ocorian’s priority; it manages over 17,000 structures on behalf of 8,000+ clients including financial institutions, large-scale international organisations, and high-net-worth individuals.

Ocorian provides fully compliant, tailored solutions that are individual to clients’ needs, no matter where in the world they hold financial interests, or however they are structured. 

The group offers a full suite of corporate, fund and private client services across a network of offices spanning all the world’s financial hubs. Locations include Bermuda, BVI, Cayman, Denmark, Finland, Germany, Guernsey, Hong Kong, Ireland, Isle of Man, Jersey, Luxembourg, Mauritius, Netherlands, Norway, Singapore, Sweden, UAE, the UK, and the US.

To find out more about Ocorian and its services, including regulatory information, visit www.ocorian.com