General stakeholder response letter - FAPB Code and SoP (2020-10)

Summary

This is a Bermuda Monetary Authority (BMA) letter responding to stakeholder feedback on its 2020 consultation paper covering the Fund Administration Provider Business Act 2019, an accompanying Code of Practice, and a proposed Statement of Principles for fund administration providers. It summarises the limited feedback received and sets out the Authority's responses to specific comments on the Code, without introducing new rules beyond confirming existing Code provisions.

• Transfer of administration on termination: The Authority rejected industry's request to replace the fixed 30-day maximum period for transferring records to a new fund administration provider with an 'as soon as practicable' standard; the 30-day maximum is retained.
• Accountability for client due diligence monitoring: Where a fund administration provider takes on investor verification duties for a fund, the party ultimately responsible for the provider's operations (e.g. its board) is accountable for ensuring compliance with internal arrangements; no specific requirement for an annual audit was imposed.
• Meaning of 'material business change': A change is 'material' if, when known, it would reasonably affect a prudent client's decision to engage or continue engaging the provider. Each provider's governing body must determine what constitutes reasonable disclosure given the nature of the change and its client base, and should consider notifying all clients if a change is material.

The letter is informational and clarificatory in nature, confirming the Authority's intended approach to finalising the Code of Practice and Statement of Principles rather than announcing new binding requirements or a commencement date for revised rules.

Key obligations

• Fund administration providers must transfer client records to a new fund administration provider within a maximum of 30 days following termination of services.
• The governing body of each fund administration provider business is responsible for determining what constitutes reasonable disclosure of a 'material business change' to clients, based on the nature of the change and its client base.

Applies to

fund administration providers

Deadlines

• 30 days: Maximum period under the Code of Practice for transferring fund administration records to a new fund administration provider following termination of a provider's services.