United Kingdom – the Overseas Funds Regime (OFR)

The Financial Conduct Authority (FCA) has introduced the Overseas Funds Regime (OFR) to facilitate the promotion of certain investment funds established outside the UK within the UK market, including to retail clients. This new regulatory framework aims to streamline the process for overseas funds to gain recognition and be marketed similarly to UK-authorised collective investment schemes.

Key Points of the OFR:

Eligibility

The OFR is initially available to most funds established in EEA and EU member states under the UCITS Directive, excluding money-market funds. This broad eligibility criterion ensures that a wide range of funds can potentially benefit from the regime, provided they meet the necessary standards and requirements set by the FCA.

Application Process

Fund operators looking to market their funds in the UK under the OFR must follow a structured application process:

1. Registration (enrolment): Fund operators need to register on the FCA Connect system.
2. OFR Application Form: Complete the detailed application form, providing comprehensive information about the fund, including its structure, investment strategy, and compliance with relevant regulations.
3. Fee Payment: Pay the required application fee as part of the submission process.
4. Review Period: The FCA has a two-month period to review the application and make a decision. During this time, the FCA may request additional information or clarification from the fund operator.

Timeline

The gateway for new schemes to apply under the OFR opened on September 30, 2024. For schemes currently operating under the Temporary Marketing Permissions Regime (TMPR), landing slots will start in October 2024. This phased approach is designed to ensure a smooth transition for funds moving from the TMPR to the OFR, minimizing disruption and ensuring continuity for both fund operators and investors.

Transition Process

A structured transition process is in place for funds moving from the TMPR to the OFR. This process is designed to ensure fairness and operational efficiency, providing clear guidelines and timelines for fund operators to follow. The FCA aims to minimize any potential disruption during this transition, ensuring that funds can continue to operate smoothly while complying with the new regulatory requirements.

Disclosure Requirements

Fund operators must adhere to specific disclosure requirements under the OFR to ensure transparency and protect UK investors. The FCA has published draft disclosure wording to guide fund operators. This document summarizes the requirements for OFR recognition applications, focusing on the availability of consumer redress schemes in the UK and abroad. The FCA has proposed specific wording options for prospectuses to ensure UK investors are clearly informed about mechanisms like the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS).

The FCA’s proposed wording helps ensure that UK investors are aware of their rights to seek redress or compensation. The wording also includes clear warnings where these rights are limited or unavailable.

Additional Resources

For more detailed information and guidance on the OFR, fund operators can refer to the following documents:

• Standalone scheme (not in TMPR)
• Standalone scheme (in TMPR)
• Umbrella scheme (not in TMPR)
• Umbrella scheme (in TMPR)
• Addition of (a) new sub-fund(s) to an umbrella scheme that has already been recognised under the OFR

These documents provide comprehensive guidelines and a clear roadmap for fund operators looking to market their funds in the UK under the new regime.

If you have any specific questions or need further details, please feel free to contact us. We’re here to help!

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