On 3 July 2012 the European Commission issued a proposal for a Directive amending the UCITS Directive as regards depositary functions, remuneration policies and sanctions, known as the "UCITS V" proposal.
The Madoff fraud and the Lehman Brothers default have drawn the EC’s attention to the UCITS depositary whose duties had been governed by a set of generic principles that led to diverging national interpretations across the EU, specifically in relation to liability. The challenge is to clarify the role and responsibilities and ensure consistency between Member State rules, thus enhancing investor protection. The EC also intends to align the UCITS framework with the Alternative Investment Fund Managers Directive (AIFMD) regime, which will enter into force in July 2013.
The financial crisis has also brought attention to remuneration policies and incentive schemes across the financial sector. UCITS V intends to apply new rules on remuneration of UCITS managers consistent with those under the AIFMD and the Capital Requirements Directive.
Finally, another feature of UCITS V is a new harmonised sanctions regime for breaches of UCITS rules.