UK investor access to UCITS and Alternative Investment Fund (AIF) sub funds will continue unimpeded in the event of a no-deal Brexit, HM Treasury has confirmed.
Following industry lobbying, the Treasury has allowed EU-domiciled sub funds launched after the 29 March 2019 - when the UK is scheduled to leave the EU - to be marketed and sold into the UK, via an amendment to the Temporary Permissions Regime (TPR).
The government's TPR allows for relevant EEA financial services firms and funds to continue to access the UK market while seeking full authorisation or recognition in the UK.
The ammendment to allow sub-funds will apply to umbrella funds registered under the TPR prior to 29 March.
No such equivalent has been offered by EU authorities.
It coincides with work from the Financial Conduct Authority, which is consulting with market participants to ensure a "smooth transition" for EEA firms conducting business in the UK in case of a no-deal Brexit and a failure to secure an implementation period.
As part of the EU Withdrawal Act 2018, the Treasury has passed new statutory instruments (SIs) that amend UK law to allow a series of different fund types to continue to be marketed and sold into the UK in the event of a no-deal Brexit.
Prior to its latest SIs with regard to UCITS and AIFs, the Treasury has previously passed SIs allowing for the sale of venture capital funds, social entrepreneurship funds, long-term investment funds and money market funds.
The Treasury explained: "New sub funds of an umbrella fund will be permitted to notify the FCA to enter the TPR after exit day.
"New sub-funds of an umbrella fund are those which become authorised in accordance with the UCITS Directive by their EEA home state regulator on or after exit day.
"For those new sub-funds to enter the TPR after exit day, at least one other sub-fund of the new sub-fund's umbrella fund must have notified to enter the TPR before exit day.
These SIs will make amendments to retained EU law related to investment funds and their managers to ensure that it continues to operate effectively in a UK context once the UK leaves the EU, in any scenario."
Commenting on the Treasury's decision, Chris Cummings, chief executive of the Investment Association, said: "HM Treasury's decision to include sub funds launched after 29 March 2019 in the Temporary Permissions Regime is welcome news for the asset management industry and the millions of UK savers and investors we serve.
"In a possible no deal Brexit, HM Treasury's commitment to remain open to international funds ensures that the UK will remain a world leading asset management centre and that UK savers will continue to have access to a full range of investment opportunities."
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