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Fund Distribution Alert 2020-08

Fund Distribution Alert 2020-08

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Said Fihri

Partner, ADV – Investment Services

KPMG in Luxembourg

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AMF issues policy recommendation for UCITS using non-financial aspects in marketing communications

On 11 March 2020, the French financial supervisory authority AMF issued a policy position/recommendation (DOC-2020-03) for funds marketed in France to retail investors and which use sustainability and ESG criteria as key aspects of their marketing strategy.

Following a surge of funds mentioning non-financial criteria such as ESG (“Environmental, Social and Governance”) and sustainability as key aspects of the communication with investors, the AMF set out to ensure that such communications are clear, accurate and not misleading to avoid e.g. greenwashing. Consequently, the issued recommendation emphasizes that the use of non-financial criteria must be measurable and have a significant impact on the objectives of the funds, if these criteria are to be used as key aspects of any communication.

The AMF defines “key aspect” as instances where the non-financial characteristics form part of the name of the product, is mentioned in the KIID or is prominently featured in marketing material. The authority considers that this is appropriate only if the approach is “significantly engaging” and provides several criteria which need to be adhered. It goes on specifying examples which are not considered sufficient, such as e.g. “the use of a filter excluding certain sectors of activity” or the mere mention of a rating.

In accordance with the recommendation, management companies are informed that the below documents and information must either be updated to comply with the recommendation or non-financial references must be removed:

  • Prospectus,
  • KIIDs,
  • Constitutional documents,
  • Marketing material,
  • Financial reports,
  • Name of the funds/sub-funds.


Specific paragraphs in the recommendation mention how to correctly update the investment objective and the investment policy of the relevant UCITS.

For foreign investment funds impacted by the recommendation, the AMF requests the insertion of a specific disclaimer in the marketing documents. The funds must inform the investors that the UCITS “presents disproportionate communication on the consideration of non-financial criteria in its investment policy".

Application: For newly created funds and any new cross-border notifications of marketing of foreign-based UCITS, these measures are immediate. For any existing funds currently marketed in France, the management companies should update all relevant details before November 30th 2020.

The AMF notes that the policy recommendation may have to be redefined depending on the outcome of regulatory changes on a European level.

Stay tuned for KPMG Luxembourg’s cross-department communication on how we can help.

To access the policy recommendation, please follow this link

Contact

Said Fihri
Partner
+352 22 51 51 7892
said.fihri@kpmg.lu


Stephanie Zedda
Senior Manager
+352 22 51 51 7271
stephanie.zedda@kpmg.lu

Please note that any information provided is general in nature, is based on the latest publicly available information as analyzed on a best endeavor basis and does not constitute any specific legal opinion or advice.

© 2020 KPMG Luxembourg, Société coopérative, a Luxembourg entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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