Fund Distribution Alert 2021-11

United Kingdom - Financial Services Act 2021 passed

United Kingdom - Financial Services Act 2021 passed

Contact

Said Fihri

Partner, ADV – Investment Services

KPMG in Luxembourg

Email

On 29 April 2021 the UK parliament announced that  the Financial Services Act 2021 received royal assent and now has the status of law.

The act was prompted to ensure that the UK's regulatory framework continues to function effectively after leaving the EU and covers themes such as financial stability and openness. This includes implementing remaining Basel III standards, introducing a prudential regime for investment firms, LIBOR transition plus a series of miscellaneous changes.

From a fund distribution perspective, we already communicated the most important changes to our clients during 2020. Below is a summary on particularly important changes which are now effective:

  • The Temporary Marketing Permissions Regime’s (“TMPR”) validity is extended until 31/12/2025 for UCITS and AIFs notified to this effect prior to 31/12/2020. As part of this, the FCA gets powers to create “landing slots” for funds to leave the temporary regime and apply for permanent recognition;
  • The Overseas Funds Regime (“OFR”) is introduced, permitting overseas collective investment schemes, deemed equivalent to UK schemes, to be recognised by the Financial Conduct Authority (the “FCA”) for marketing in the UK. With the passage of the Act, the following powers have been granted:
    • HM Treasury gets powers to grant equivalence status to groups of overseas funds;
    • FCA is granted powers to determine the manner and form in which applications for recognition are to be made;
    • FCA gets powers to make rules concerning additional requirements concerning potential gaps between UK funds and equivalent overseas ones.

      For further information on the OFR, please consult our blog entry here.
       
  • The Gibraltar Authorisation Regime (“GAR”) is introduced, allowing reciprocal access for funds between the UK and Gibraltar.
  • The UK’s onshored PRIIPs regulation is adapted to remove the performance scenarios obligation, replacing it with appropriate ”information on performance”. The following powers are granted:
    • FCA gets powers to make rules to specify which products are within the scope of the PRIIPs Regulation;
    • HM Treasury gets powers to further extend the exemption currently in place for UCITS retail schemes until 31 December 2026.
  • The UK rules on reverse solicitation is clarified with a specification on solicitation and own exclusive initiative.

The passage of the act is available here and the full act can be accessed here.

Please feel free to contact us should you require any additional information.


Please note that any information provided is general in nature, is based on the latest publicly available information as analyzed on a best endeavor basis and does not constitute any specific legal opinion or advice.

Said Fihri

Partner
+352 22 51 51 7892
said.fihri@kpmg.lu

Stephanie Zedda

Director
+352 22 51 51 7271
stephanie.zedda@kpmg.lu