Who is the ACD and why do they matter to retail investors?


If you are investing in a pension or hold a stocks and shares ISA the likelihood is at least some of your money is invested in the OEIC fund, the most common form of collective investment available. We should know this but within that legal structure, are we all clear on who the ACD is? In fact, do we know what the ACD does and what they are responsible for?

The ACD is the Authorised Corporate Director, whose primary role is to give oversight to the running of the fund on behalf of the underlying investors. In many cases this is an independent firm and in other firms is it the Fund Manager itself, having established a separate Board to provide that oversight.

the Investment Association has warned member ACD firms that they are “entering a period of further regulatory focus”

ACD responsibilities, having been appointed by the Fund Manager (Asset Management firms who have sponsored the fund in the first instance) include;

  • Fund oversight and governance
  • Investment management, avoiding breaches of investment and borrowing powers
  • Deciding on voting rights
  • Maintenance of accounting records
  • Complying with regulations
  • Issuing of units/shares
  • Issue of Financial Report and Accounts including a value for money statement for each share class
  • FCA Asset Management Market Study requires 2 INEDs on each board – in a nutshell the investors champion, always putting the investors interest first

In the case of the independent ACD, the fund manager (normally the same as an Asset Management firm who sponsored the fund) hires the ACD to perform these tasks and can dismiss them if they feel they are not up to the job. I think it’s now becoming clearer why this is an important role and why investors should take note of who the ACD is.

There are two obvious conflicts;

  1. If the ACD is independent and pushes back too hard on the fund manager and stops or restricts them running the fund in the way they want, they could be dismissed and lose the fee paid to them
  2. If the ACD is a sub board of the Asset Management firm, how do they really give oversight to the running of their own fund (there are several instances where the ACD Board and Board of the Asset Management firm is one and the same)

Of course, this had all bubbled up as the suspension of the Woodford Equity Income Fund continues. And if you want to know what investors think of that I suggest you get on Woodford’s twitter feed!

In August, the FCA announced that it is reviewing the activities of ACDs and while the detail of their focus is yet to be made clear, the Investment Association has warned member ACD firms that they are “entering a period of further regulatory focus”. It’s highly likely this will be coupled with the 30th September deadline for compliance, along with the Asset Management Market Study requirements and the conflict of interest issues highlighted above.

The impact of the review could see a major shake up in the running of the collective investment schemes that we are all exposed to through our own investments.


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Julia Kirkland, Head of FSTP Limited FSTP is now part of ZISHI and OSTC Group

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