Despite the first deadline for authorisation under the European Alternative Investment Fund Manager's (AIFM) directive passing, the industry is still coming to terms with its impact, new studies have found.

A survey of more than 90 AIFMs in London, Paris and Luxembourg by Kneip found they were stepping up their preparation for the AIFMD, with well over half having to increase headcount to help bolster their back-offices. Some 58% said they were going to, or were considering, hiring new staff to meet the requirements of the directive.

Mario Mantrisi, chief strategy and research officer at Kneip, said: “The new regulatory requirements mean that AIFMs need to ensure they have the right people in place to help them become compliant. For some managers this has involved expanding their team, whereas others are taking a different approach by outsourcing their entire back-office function to a third party.”

Kneip also found almost a third (29%) were most concerned by increasing costs as a result of the directive, with 27% citing the potential for reputational damage through failing to comply in time as their top concern.

A similar survey of 70 investors from Europe, Asia, the US and Latin America by BNY Mellon found “significant uncertainty” about AIFM directive requirements.

BNY Mellon found that while more than half (58%) of firms have an AIFM directive project team in place, almost three quarters (73%) did not expect to apply for authorisation before 2014, although initial compliance and set-up costs were estimated from $300,000 to more than $1m per institution.

The survey also found many investors perceive the directive as negative, with half of respondents believing the directive would be a burden on their businesses. Fewer than a fifth (18%) of those surveyed believed the AIFM directive would be a benefit.

The survey showed many institutions believe the cost and complexity of compliance will reduce choice and increase costs. BNY Mellon found 67% thought the number of alternative funds would fall, with 39% believing their firms would close, merge or move funds outside of the EU. A further 88% thought the cost of investing, measured in Total Expense Ratio would increase as a result.

Hani Kablawi, Emea head of asset servicing at BNY Mellon, said: “Despite today being the deadline to apply for authorisation under the AIFM directive, much work remains for the industry to achieve full compliance, with our research suggesting that the burden of regulation could even lead to a lower number of funds available to investors.

“Despite attempts to improve investor access and information, the industry is challenged by the complexity of implementing and the need to comply with it in the future. This is a demanding time for the industry as it grapples with the slew of further regulation under implementation or discussion across Europe.

Financial services regulatory consultancy Bovill said most managers should use the transitional year allowed under the directive - which permits managers to operate under the existing regulatory environment for 12 months to July 2014 – rather than apply for immediate authorisation, as the 'passport' aspect of the AIFM directive was not yet active in all European countries, as not all countries had yet implemented the directive, leading to regulatory confusion.

The firm also said there was confusion over which managers would be forced to apply the full AIFM directive remuneration rules, with guidance from the UK Financial Conduct Authority (FCA) not expected to be finalised until the end of the year.

John Everett, principal at Bovill, said: “The rules on pay are a real sticking point for alternative fund managers so knowing whether and how they apply is crucial. Until the FCA guidance on proportionality is published, there is going to be a lot of uncertainty among fund managers who get authorised under about whether they have to implement the strict rules on pay. Getting it wrong may lead to a costly, protracted authorisation process with the FCA.”