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AE provider schemes and risk levels
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69. (1) An investment management contract shall require the investment management provider to provide a UCITS or an alternative investment fund for the purposes of this Part within each of the risk levels that have effect in accordance with subsection (3).
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(2) A UCITS or an alternative investment fund provided in accordance with subsection (1) is referred to in this Act as an “AE provider scheme”.
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(3) The risk levels for the purposes of this Part are—
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(a) the higher risk level, consisting of AE provider schemes with a risk rating of 5, 6 or 7,
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(b) the medium risk level, consisting of AE provider schemes with a risk rating of 3 or 4,
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(c) the lower risk level, consisting of AE provider schemes with a risk rating of 1 or 2,
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or such other risk levels as may be prescribed under subsection (4).
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(4) The Minister may prescribe risk levels in place of the risk levels set out in subsection (3), provided that at any time—
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(a) there are at least 3 prescribed risk levels, and
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(b) each prescribed risk level consists of AE provider schemes whose risk rating (within the meaning given by subsection (5)) is a number, or within a range of numbers, prescribed.
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(5) For the purposes of this section, “risk rating”, in relation to an AE provider scheme, means the number assigned to the scheme on a scale representing risk from a low of 1 to a high of 7, where the scale and methodology used satisfy the conditions which apply in relation to the scheme under regulations under subsection (6).
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(6) The Minister may make regulations prescribing the conditions to be satisfied by a scale and methodology used for the purposes of subsection (5) to indicate the level of risk of AE provider schemes, and different conditions may be prescribed in relation to schemes of different classes.
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(7) In making regulations under subsection (6) the Minister shall have regard to—
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(a) any scale and methodology applying under an enactment or European Union act for the purpose of indicating the level of risk of a UCITS or alternative investment fund,
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(b) custom and practice in the financial industry in applying scales and methodologies referred to in paragraph (a) or other scales and methodologies for the purpose of indicating the level of risk of a UCITS or alternative investment fund,
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(c) the extent to which a scale and methodology referred to in paragraph (a) and custom and practice referred to in paragraph (b) are applicable to AE provider schemes to which the regulations apply and appropriate for the purposes of this section, and
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(d) without prejudice to paragraph (c), the extent to which a scale and methodology, and custom and practice, referred to in that paragraph take into account climate related risks.
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