European regulators are wary of making depository banks looking after Ucits assets liable for losses due to the failure of a sub-custodian. Responding to a European Commission consultation on Ucits depositaries, the Committee of European Securities Regulators proposes a much greater degree of control over the delegation of custody functions to a sub-custodian, but is not in favour of depositaries offering full guarantees.

The Commission launched a review of the Ucits depositary rules earlier this year after the Bernard Madoff fraud highlighted diverging views between member states on the duties and liabilities of depository banks.