LTAF – FCA publishes its final rules

The FCA has today published PS21/14, its policy statement and final rules for the new Long Term Asset Fund (LTAF).

The new rules come into effect on 15 November 2021 – the FCA is encouraging firms which are considering making an authorisation application for an LTAF to engage with it prior to submitting an application.

The FCA consulted on rules to introduce the LTAF in May – see our summary of CP 21/12 here and our response to the FCA here.

The LTAF is a new category of authorised fund, intended, in the FCA’s words, “to facilitate investment in long-term illiquid assets combined with rules to address the specific risks these assets pose” allowing retail investors better access to such assets while providing an appropriate level of investor protection.

As a result, we consider that the LTAF fills an important gap in the UK funds market and we welcome its introduction.

The final rules included in PS generally follow those on which the FCA consulted, though a number of changes have been made in order to address points raised in feedback to CP21/12. These include:

• minimum standards on redemptions making these no more frequent than monthly and only after a minimum 90-day notice period;
• changes to the rules on loans and second schemes; and
• allowing the LTAF to be promoted to high net worth investors under the NMPI rules as well as to sophisticated retail and professional investors.

We are reviewing the new rules in detail and will be publishing our summary as soon as possible.

Update: our detailed summary is now available and can be found here.