As we have previously reported, the UK's Overseas Funds Regime (OFR) will open for applications in September 2024. This will allow streamlined access for overseas schemes, such as EEA UCITS, to market to UK retail investors.
With the legislation already in place, all that was missing were the FCA's final rules.
These have now been published in PS 24/7, "Implementing the Overseas Funds Regime. Feedback to CP23/26 and final rules".
While we are still working our way through the detail, it seems that the changes from the proposals on which the FCA consulted in CP23/26 are not substantial - for a summary of CP23/26, see our article here.
For a fuller client briefing note on what affected firms should be doing to prepare for the OFR, see here. (Note that we will be updating this briefing note to take into account any changes made by PS24/7.)
Overview of PS24/7
The new rules set out the information that the FCA needs firms to submit so it can determine an application for recognition, with a view to streamlining the process while still being able to spot outliers and funds with unusual features.
OFR fund operators will be required to notify the FCA of certain changes to the fund so it can assess any potential UK consumer harm which might arise from those changes.
The new rules also include measures that provide UK consumers with a clear explanation as to whether an OFR fund is covered by the FOS and FSCS in relation to their investment decisions.
In light of the 25 responses it received to CP23/26, the FCA has decided to amend some of its original proposals. In particular, the final rules
remove the proposed 30-day period between notifying the FCA of changes to OFR funds and when those changes could take effect in the UK, with changes instead needing to be notified ‘as soon as reasonably practicable’ after home regulator approval has been received for a change or after a decision to make a change has been taken if no home regulator approval is required for that change
provide further explanation and clarification as to which categories of changes need to be notified
include guidance concerning additional information to be provided in disclosures for fund prospectus’ and point of sale information
clarify which UK fund prospectus requirements apply to OFR funds, including noting that a UK supplement is considered to form part of the prospectus
mean the FCA will not, as initially proposed, reject a fund from the OFR on the basis of it having an identical name to a UK authorised fund
What happens next?
The new FCA rules and guidance will come into force on 31 July 2024.
The OFR will open
to non-TMPR firms without a landing slot in September 2024
to TMPR stand-alone schemes in October 2024 and
to TMPR umbrella schemes in November 2024.
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