Europe:  FCA Sets Ambitious Goal to Improve Asset Management Regulation in the UK

By Robert Lloyd, Maya Ffrench-Adam and Philip Morgan

On 20 February 2023, the FCA published a discussion paper (DP23/2) on improving the UK asset management regime.  Key themes include:

Alignment with Relevant International Standards 

The FCA does not want to create unnecessary complexity for firms operating in multiple jurisdictions. It aims to develop the regime to interact effectively with international requirements, while promoting the international competitiveness of the UK economy.

Desire for a common framework for UK UCITS managers, AIFMs and portfolio managers, but a single rulebook seems unlikely. The FCA wishes to address the duplication and inconsistencies in the current regime resulting from the EU legislation on which the current rules are based (in particular, the UCITS Directive, AIFMD and MiFID).  The FCA is considering creating a common framework for all types of asset manager, but this may not be consolidated into a single sourcebook.

Clearer Regimes for Retail and Professional Funds

The FCA recognises that having different regimes for different types of retail products is counterintuitive, particularly for UCITS and non-UCITS retail schemes. The FCA also wants to tailor the rules for wholesale markets to better suit UK markets without significantly changing rules derived from the AIFMD. 

Technology and Innovation

The FCA does not want its rules to limit potential for innovation or efficient use of technology.  It is particularly interested in the use of technology to improve interactions with investors.

The FCA is requesting feedback on:

  • structural changes, for clarity and coherence, to the regulatory regime;
  • certain specific areas of the regime the FCA believe could improve; and
  • fostering the implementation of technology to support better outcomes for firms and investors.

K&L Gates plan to respond to the FCA before the deadline of 22 May 2023. If you have comments you would like us to incorporate, please contact Philip Morgan

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