European regulators are launching a review of fund managers’ compliance and internal audit functions.
On Friday, the European Securities and Markets Authority (ESMA) and various national regulators said they’re undertaking a joint review of retail fund management companies and alternative investment managers across the European Union (EU).
The review, which will be carried out throughout the year, “aims to assess to what extent [fund managers and alt managers] have established effective compliance and internal audit functions with the adequate staffing, authority, knowledge, and expertise to perform their duties,” and whether they’re meeting their requirements in this area.
These functions are intended to ensure that fund managers’ internal controls are capable of identifying, measuring and mitigating their compliance risks, the regulator said.
“Ensuring that [fund managers] have robust internal controls is crucial to avoid investor detriment and preserve financial stability,” it said.
ESMA plans to publish a final report detailing the results of the exercise in 2026.
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