- Operators marketing EU UCITS in the UK under the FCA’s temporary marketing permissions regime (“TMPR”) will be able to continue to do so following the expiry of the TMPR, provided they register the UCITS in question for marketing with the FCA.
- UCITS operators currently marketing UCITS under the TMPR can continue to do so until the end of 2026.
The equivalence decision
On 30 January, the UK government announced its first equivalence decision under s271A of the Financial Services and Markets Act 2000 (“FSMA”), finding EEA states to be equivalent under the UK’s Overseas Funds Regime (“OFR”).¹
The equivalence decision will apply to EEA undertakings for collective investment in transferable securities (“UCITS”), except those that are also money market funds.
To help funds transition to the OFR, the UK government also announced its intention to extend the FCA’s temporary marketing permissions regime (“TMPR”), currently due to expire at the end of 2025, until the end of 2026.
The TMPR and the OFR
Following the end of fund “passporting” rights as a result of Brexit, the TMPR was created to allow EEA UCITS that had been using the marketing passport to market to UK retail investors to continue to do so for a limited period post-Brexit. Subject to meeting certain conditions, new sub-funds of UCITS registered under the TMPR could also be marketed under the TMPR.
To transition to the new post-Brexit regime, the UK government created the OFR, a process for recognising overseas schemes, under new s271A FSMA. The OFR allows overseas jurisdictions to be deemed to be “equivalent” by HM Treasury for the purpose of marketing to UK retail investors. Individual schemes can then apply for UK recognition under a newly streamlined approval process.
What should EEA UCITS operators do now?
Operators of EEA UCITS already in the TMPR should ensure the FCA holds the correct contact email address for them, as the FCA will use this to contact them with details of the new recognition process and a “landing slot” timeline for applying for recognition under the OFR.
Operators of EEA UCITS that are not in the TMPR but wish to market to retail investors in the UK will also be able to apply to the FCA for OFR recognition.
What will the OFR application process look like?
The FCA has issued Consultation Paper CP23/26: Implementing the Overseas Funds Regime (“CP 23/26”).² It says it plans to create a new online application form for overseas firms to apply for recognition of a scheme under the OFR. The application form will require the information set out in Annex 4 of CP 23/26, specifically:
- Information identifying the scheme.
- Information on the scheme’s profile.
- Information on fees and charges at scheme and share class level.
- Information regarding the characteristics of the scheme’s units/share classes.
- Information regarding parties connected to the scheme.
- Information about the marketing and distribution of the scheme.
The application form and associated FCA rules are expected to be finalised by the end of Q2 2024.
Will OFR recognised schemes be required to comply with additional UK requirements?
No. The UK government has confirmed it does not intend to require the funds assessed (i.e. EEA UCITS) to comply with additional UK requirements as part of the equivalence assessment. However, separate to this, the UK government intends to consult on whether to broaden the scope of the FCA’s new sustainable disclosure requirements regime to include OFR-recognised funds.
- For the full text of the relevant decision, please click here: https://questions-statements.parliament.uk/written-statements/detail/2024-01-30/hcws220
- For the full text of CP 23/26, please click here: https://www.fca.org.uk/publication/consultation/cp23-26.pdf
