CSSF feedback report on ESMA Common Supervisory Action on the Supervision of Costs and Fees of UCITS

In the course of 2021 the European Securities and Markets Authority (ESMA) performed a Common Supervisory Action (CSA) with national competent authorities (NCAs) across the EU/EEA on the supervision of costs and fees of UCITS.

On 31 May 2022, ESMA published the results of the CSA in a Final Report, including the experiences and findings of all EU/EEA NCAs (including the CSSF) participating to the exercise. ESMA informed in that context that the overall level of compliance with the applicable EU legislative framework was satisfactory for most Investment Fund Managers (IFMs), but that the exercise also showed shortcomings in some areas and the need for improvements in certain key areas.

While the overall analysis of compliance for IFMs in Luxembourg is mostly consistent with the conclusions of ESMA, the CSSF would like to inform market participants about the publication of the report “CSSF Feedback Report – ESMA Common Supervisory Action on the supervision of costs and fees of UCITS” which presents the main observations made by the CSSF in the context of the CSA together with the related recommendations for improvements in view of the applicable regulatory requirements.

The CSSF is currently engaging on a bilateral basis with certain IFMs in relation to the observations made in the context of the CSA exercise, thereby asking these IFMs to implement the necessary corrective measures for the observed shortcomings.

In addition, the CSSF asks hereby all IFMs to conduct, by the end of the first quarter 2023, a comprehensive assessment with regard to the compliance of their policy, approach and arrangements related to costs, in relation to the observations of ESMA and of the CSSF and to take, if applicable, the necessary corrective measures.

As the supervisory briefing on the supervision of costs published by ESMA in June 2020 and referenced in the Final Report applies both to UCITS and AIFs, the CSSF requires that the review of the pricing process is also performed by AIFMs for their AIFs under management.