FCA seeks views on regulatory approach for overseas funds

What is the potential impact on your business? 

In November 2023, the FCA, in preparation for the new Overseas Funds Regime (OFR), set out its proposals in its Consultation Paper CP 23/26 for how the regime should operate.

What are the key points? 

The OFR has been designed by Parliament to provide a streamlined process that allows non-UK domiciled funds to market to UK retail customers where the Government has found a jurisdiction equivalent. 

The FCA is consulting on changes to its rules that will allow overseas schemes to be recognised under the OFR, should the UK Government make any determination on equivalence. This is to allow the FCA and firms enough time to prepare for the changes necessary. As the OFR allows the Government to recognise any overseas jurisdiction as equivalent under s271A, the FCA may consult about additional investor protection requirements following each decision by the Government.  

The FCA has proposed the categories of information that overseas schemes will need to submit to become recognised by the FCA under the OFR. This includes key information about the scheme’s investment objective and policy and the main categories of assets that it invests in. 

To date, firms submitting information about collective investment schemes to the FCA have had to either submit hard copy documents by post or attach electronic copies to an email. The FCA is improving its capabilities so that firms can interact with it in a more streamlined way, and it plans to: 

• Create a user registration process on its technology systems, which will enable it to verify the principal user for overseas firms,
• Create a new online application form for the overseas firm to apply for the OFR scheme recognition. This will require a certain amount of data entry from the applicant at the point of initial registration, but will allow for efficient updates thereafter and enable firms to move away from making paper-based applications,
• Create a new online application form for the overseas firm to notify the FCA of any material changes once the scheme has been recognised, and
• Publish details of the recognised schemes on the FCA register.

The FCA has also put forward new measures to make sure investors are aware of the protections they have, such as access to the Financial Ombudsman Service and the Financial Services Compensation Scheme, if they invest in an overseas fund. Overseas funds will need to make it clear when these customer protections are not available. 
Subject to the responses received, the FCA will seek to publish a final policy statement and final Handbook rules in 2024.

How can we help you? 

Thistle Initiatives has supported fund firms for over 10 years as a trusted compliance and regulatory advisor. In addition to assisting you as-and-when, our team of specialists can serve as your right hand in meeting and complying with FCA regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so. 

Are you looking for help with your future compliance with the Overseas Funds Regime, or more general regulatory questions? Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 020 7436 0630 or sending an email to info@thistleinitiatives.co.uk.