Perspectives · Fund regulation
What a DDQ is, and who answers it
A due diligence questionnaire, or DDQ, is a structured set of questions one firm sends another before it invests with it, appoints it or relies on it. In fund management the best known are investor DDQs about managers, but managers send their own to the firms they depend on. This perspective is general information, not legal advice.
Week 40, published 10 November 2026 · Fund regulation
The definition
A standard set of questions before you rely on someone
A DDQ asks about the things that matter before a relationship starts: ownership and governance, people, operations, controls, regulatory status, conflicts, cyber security and business continuity. The answers are written, attributable and kept, which is what makes them different from a call.
Industry bodies publish standard templates so that the questions are the same from one firm to the next. ILPA publishes a DDQ intended to standardise the key areas of inquiry investors raise when they diligence private markets managers. AIMA has published DDQs since 1997, when the first was released for investors conducting due diligence on hedge fund managers.
The two directions
Investors ask managers, and managers ask suppliers
AIMA describes its DDQs as helping investors assess the fund investments they might make, and helping fund managers choose service providers, directors and boards for their funds. The same firm is often on both sides: answering an investor's DDQ in one week and sending its own to a fund administrator or a bank the next.
For regulated firms the second direction is not optional good practice. The FCA says firms that use outsourced and third party providers must take responsibility for managing the risk from those arrangements, and cannot delegate any part of that responsibility to a third party.
The process
A DDQ starts the conversation, it does not finish it
AIMA notes that for investors the DDQ is an early step in due diligence and by no means the last. The answers are used to decide where to ask more questions and to cross check what other sources say.
The same is true of supplier due diligence. A completed questionnaire leads to follow up questions, a conclusion, a named person who reached it, and a date for the next review. The questionnaire is the evidence; the decision is what the firm is accountable for.
The practice
What makes a DDQ programme hold up
Three things tend to separate a programme that holds up from one that does not. The questions are proportionate to how much the firm depends on the supplier. Last year's answers are kept, so a change can be seen. And every review ends with a recorded conclusion rather than a filed spreadsheet.
The FCA also expects firms to be risk based and proportionate, considering the nature, scale and complexity of their operations. A small supplier of a minor service does not need the questionnaire sent to a fund administrator.
In Alethia
Supplier due diligence beside the provider record
Alethia runs supplier due diligence against the service providers recorded for your entities. You can set a tier for each provider, start a review, send the questionnaire, record a conclusion and reopen or amend it later, with each step in the audit log.
Questions
DDQs, answered
What does DDQ stand for?
Due diligence questionnaire.
Who writes the questions?
The firm doing the due diligence, often starting from an industry template such as those published by ILPA or AIMA and adding questions of its own.
Is a completed DDQ enough on its own?
Usually not. AIMA describes the DDQ as an early step in due diligence, used to decide where to look further. A firm still needs to reach and record its own conclusion.
Keep every supplier review with the supplier
Hold questionnaires, answers and conclusions beside the provider record, so next year's review starts from this year's answers.