Solvency II template is ‘huge step’ for standardisation

The lack of harmonised data reporting remains a problem in the private funds industry but the TPT template could be a fix.

The template used by private funds managers to report to insurance company investors is being touted as the industry’s most successful attempt to standardise investor reporting so far.

Speaking at this week’s Invest Europe CFO Forum, industry experts said the Tripartite Template for Solvency II reporting was a “huge step forward” and the “biggest attempt at standardisation in the industry.”

The 126-field template, once completed by the fund manager, allows an insurance company to calculate whether its holdings meet with the solvency capital requirements of the EU’s Solvency II directive.

Insurance companies have been the only investors requesting fund managers use the template, but panellists said there is no reason it shouldn’t be rolled out across the industry.

“This is the way forward, it drills down to the lowest portfolio company level and provides very granular data,” a CFO from a private equity firm said.

Lamenting the lack of standardisation in the industry panellists said they were generally using a combination of other available reporting templates to meet investor demands for more detailed fund information.

“We get demands from some US investors to report using Institutional Limited Partners Association’s fee reporting template, but it’s not suitable for all reporting and we don’t use the entire format,” the managing partner of a private equity firm said.

The CFO of a global private equity firm agreed, adding its firm had noticed an increase in the number of European investors expecting reports equivalent to ILPA-compliant documents.

“The template increases transparency over management and fund costs, but it has its shortfalls,” the CFO said. “We use Invest Europe’s [Solvency II] model to bridge the gaps.”

The senior vice-president of a fund administrator said its firm has stuck to the guidelines provided by Invest Europe when it comes to producing reports for its clients.

“Demand drivers vary from investor to investor, they could be related to transparency or regulatory requirements, the way the investor operates. That’s part of the reason there is a lack of standardisation,” the administrator said.

The data fields in the Invest Europe guidance are generally available freely from the GP and is usually enough for most investors, he added.