Implementation of the new Overseas Fund Regime ("OFR") is an important piece of the jigsaw for the UK market place. With the FCA's publication of Consultation Paper 23/26 in December 2023, we have some, but only some, of the answers on outstanding aspects of the new regime.
Going forwards, the FCA will apply the term "recognised scheme" both to OFR recognised schemes – schemes recognised under Section 271A of FSMA - and schemes that are individually recognised under Section 272. (The FCA plan to review the rules on UK facilities for Section 272 schemes in due course to consider whether to bring them into line with the proposals for the OFR recognised schemes.)
In CP 23/26, the FCA set out their proposals for the operational aspects of how the OFR will work – information the FCA will need to obtain from scheme operators to inform their recognition decisions; proposals for notification requirements for overseas recognised schemes; and measures so consumers have clear explanation that the UK Financial Ombudsman Service and Financial Services Compensation Scheme do not apply.
However, we are still awaiting the critical piece of the jigsaw from HM Treasury, notably it making its equivalence regulations under Section 271A in relation to collective investment schemes in any overseas jurisdiction. The key issue for many firms is whether EU UCITS which are currently promoted in under the TMPR will need to apply for recognition under the OFR regime by the end of the statutory period for TMPR in order to continue marketing in the UK, which is expected if the Government makes equivalence regulations under Section 271A. We have yet to hear from the Treasury on this.
Read the full briefing paper by Kirstene Baillie, Partner, Asset Management and Investment Funds, Fieldfisher LLP here.
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