The FCA updated its website on 4 December 2023 to open a consultation on proposed changes to its rules to allow overseas funds to be recognised under the Overseas Fund Regime (OFR). The OFR is based on a determination by the UK Government on jurisdictional equivalence. The UK Government is currently reviewing the equivalence of EEA UCITS. The FCA consultation discusses how the FCA would recognise funds for offer in the UK following an equivalence determination by the UK Government under the OFR.
The consultation allows stakeholders the opportunity to comment on the FCA proposals and provides advance notice for firms to plan for any changes.
Pending an equivalence decision from the UK Government, operators of Schemes in the TMPR will be given landing slots in which to apply under the OFR. Further information about landing slots will be published on the FCA website.
The key proposals include:
- Collection of data on the funds recognised under the OFR (Appendix I);
- New obligations for 30 days prior notice to the FCA for specified proposed changes to the scheme (Appendix II);
- Details of information to be provided to the FCA on an ongoing basis;
- Requirements for pre-sale disclosure in the Fund Prospectus, financial promotions and KIIDs in relation to the lack of, or limitations, on the UK Financial Ombudsman Service (FOS) and Financial Services Compensation Scheme (FSCS) coverage for UK investors, including alternative provisions afforded under the home Member State of the fund;
- The requirement that financial promotions relating to funds recognised under the OFR be communicated or approved by a UK authorised firm unless an exemption applies;
- A proposal for investor facilities to be provided electronically from a non-UK address;
- The process for public censure of an OFR recognised scheme.
- Application and periodic fees applicable to funds in the OFR.
The data to be provided to the FCA as part of the OFR application, and on an ongoing basis, is detailed in Appendix II and include legal identifiers information on fees and charges, identification of key parties linked to the fund, including those with an ongoing relationship or with influence on its management or who have played a crucial role in its establishment (e.g. Directors, service providers, persons approving financial promotions in the UK, sponsors).
The FCA has invited feedback to the Consultation Paper by Monday 12 February 2024. It is anticipated that a final policy statement and final rules will be published in the first half of 2024.
The FCA reiterates its request that operators of UCITS in the TMPR to review contact information and details of funds operated by them and advise any changes that need to be made.
Appendix 1
Information | Action required |
Contact information | Check current contact information is up-to-date and amend if it is not |
Fund population | Check on FCA Register and email recognisedcis@fca.org.uk if any changes are needed. |
Information Category | Specific requirements |
Information identifying the scheme |
|
Information on the scheme's profile |
|
Fees and charges at scheme and share class level |
|
Characteristics of unit/share classes |
|
Parties connected to the scheme |
|
Appendix 2
When is the notification required? | Type of change |
Notification n required at least 30 days before the change could take effect in UK |
|
Notification required as soon as is reasonably possible |
|
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.