The U.K. Financial Conduct Authority (FCA) recently issued a report detailing the key findings of its examinations of a sample of authorized fund managers (AFMs), commonly referred to as “host” AFMs or authorized corporate directors, which delegate investment management to third parties outside the AFM’s corporate group. The FCA found significant shortcomings in AFMs’ due diligence practices; oversight and monitoring of the funds they manage; governance, especially as to independent directors, conflicts of interest and fees; and financial resources and risk management. This article highlights the FCA’s findings, with analysis from Sidley Austin partner Leonard Ng and Morgan Lewis partner William Yonge. For more from Ng, see “FCA Consults on Proposed Changes to U.K. Version of MiFID” (Jun. 3, 2021); and from Yonge, see “The Global Hedge Funds Landscape: Europe, Asia and the Middle East (Part Two of Two)” (Jul. 15, 2021).