FCA Policy Statement - Implementing the Overseas Funds Regime
As mentioned in the Government and FCA's joint roadmap on implementing the Overseas Fund Regime (see below), the FCA published on 17 July 2024 their Policy Statement (PS24/7) on Implementing the Overseas Funds Regime (OFR). This includes feedback on CP23/26 (see below) and the final rules. The new Handbook rules and guidance to support the implementation of the OFR will come into force on 31 July 2024.
The aim of the new rules are to allow streamline access for overseas funds to market to UK retail investors. The regime is based on principles of equivalence: jurisdictions can be approved by the UK Government if they offer adequate co-operation arrangements between the FCA and relevant national competent authorities (NCAs), and if they provide equivalent investor protection outcomes to comparable UK authorised schemes.
More details about OFR can be found on the FCA's webpage 'Overseas Funds Regime: Update for firms'.
Roadmap to implementing the Overseas Funds Regime
On 1 May 2024, HM Treasury and the FCA published A roadmap to implementing the Overseas Funds Regime (OFR). This explains how the OFR is intended to be opened to European Economic Area (EEA) funds authorised under the UCITS (Undertakings for Collective Investment in Transferable Securities) Directive, following the Government’s decision to grant equivalence in relation to those funds (excluding money-market funds). The OFR roadmap gives the key stages of the process, so that operators of EEA UCITS that wish to use the OFR as a gateway to the UK market can prepare.
Legislation
In Q2 2024, legislation is intended to be laid to enact the equivalence decision, extend the TMPR and ensure it works effectively for transitioning funds
In Q3 2024, the Government intends to issue a consultation on the application of SDR and labelling for OFR fund. The aim is to lay any legislation required by the end of 2024 which would come into force in H2 2025.
Regulation
In July 2024, the FCA’s final rules for OFR funds consulted on in CP23/26 will be likely to come into effect.
If the Government legislates on SDR and labelling for OFR funds, the FCA is likely to consult on related rules and guidance in 2025.
Non-Temporary Marketing Permissions Regime (non-TMPR) funds
In September 2024, the OFR gateway opens for non-TMPR funds, which can now apply for recognition.
Temporary Marketing Permissions Regime (TMPR) funds
In October 2024 the OFR gateway opens for TMPR stand-alone schemes and in November 2024 it opens for TMPR umbrella schemes
In September 2026, the final landing slot closes for non-MMF TMPR schemes and in December 2026, TMPR ceases in respect of non-MMF schemes. The Government can choose to extend the TMPR.
Timelines
The timelines given above are subject to change. Any updates to this information will be published on the Government and FCA websites.
Background
FCA consultation on implementing the Overseas Funds Regime
Between December 2023 and February 2024, the FCA consulted (CP23/26) on implementing the Overseas Funds Regime (OFR). The FCA proposed making new rules and guidance so that overseas funds can apply to the FCA for recognition and know which FCA rules they will need to comply with. Also, the FCA clarifed how they intend to use the powers given to them under the OFR legislation, including proposals for:
- Data they propose to collect as part of the OFR application process, as well as information they intend to collect on an ongoing basis if recognition is granted.
- Requirements for pre-sale disclosure, including about the lack of, or limitations on, FOS and FSCS coverage for UK investors.
- How they plan to refuse applications for recognition or suspend or revoke a scheme’s recognised status, where necessary.
- The process for public censure of the operator of an OFR recognised scheme.
- Application and periodic fees applicable to OFR recognised schemes.
AREF's Public Policy Committee agreed to AREF not responding to this consultation.
Author
