Overseas Funds Regime: new roadmap

On 1 May 2024, HM Treasury and the FCA published a roadmap setting out the timetable for the next stages of implementing the UK Overseas Funds Regime (OFR).

This is a welcome move for EEA-domiciled funds that are not part of the temporary marketing permissions regime (TMPR) and are looking to market to the UK retail market. Until now, they have either been in limbo waiting for the OFR to be implemented, or they have had to navigate the burdensome process of applying for individual recognition under section 272 of the Financial Services and Markets Act 2000 (FSMA).

We previously published a briefing on the introduction of the OFR, and a further briefing on the FCA consultation on the implementation of the OFR and the Treasury’s equivalence decision.

The Government has now announced that by June 2024 it will introduce legislation to enact its equivalence decision in respect of EEA UCITS regimes. The Treasury had previously indicated that EEA UCITS recognised under the OFR would not be subject to any further requirements. However, it has now confirmed that it will consult later this year on whether the UK Sustainability Disclosure Requirements (SDR) and labelling regime should apply to funds in the OFR.

The roadmap sets out a helpful timetable for implementation of the OFR. The gateway will open in:

• September 2024 for non-TMPR funds,
• October 2024 for TMPR stand-alone schemes, and
• November 2024 for TMPR umbrella schemes.
  
  

For firms in the TMPR each fund operator will be allocated a three-month landing slot over the next two years, likely to be in alphabetical order. During the landing slot firms will be invited to apply for recognition under the OFR of their funds currently within the TMPR. Funds which miss their allocated landing slot will be removed from the TMPR, so firms should keep a close eye on communications from the FCA. If a fund is removed from the TMPR, it will no longer be a recognised scheme and unable to be marketed to retail investors in the UK. it will need to apply again for recognition under the OFR.

The FCA will turn around applications within two months of receipt of a complete application. Details of recognised schemes will be included on the FCA register.

There is a separate regime for overseas money-market funds (MMFs), and the Treasury consulted on this regime late last year. If an umbrella fund in the TMPR is comprised of MMF and non-MMF sub-funds, it will be given a landing slot for the non-MMF sub-funds under the OFR, and the MMF sub-funds will (for now) continue to be covered by the TMPR.

Next steps

As we finally have the timetable for the OFR, firms can start to firm up their implementation projects. Those within TMPR and with names at the start of alphabet should consider accelerating those plans.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, May 2024