(3 months, 2 weeks ago)
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The Economic Secretary to the Treasury (Bim Afolami)
Today I am notifying the House about the Government’s decision regarding the equivalence assessment for states in the European economic area, including European Union member states, under the UK’s overseas funds regime.
Asset management makes an invaluable contribution to the health of both the UK economy and individuals’ savings. The UK sector is the second largest globally and manages the savings and pensions of millions of UK citizens. Asset managers often set up their investment funds internationally, marketing their funds to investors in the UK and around the world.
In the Financial Services Act 2021, the Government legislated for a new overseas funds regime, to create a more streamlined process for overseas investment funds to be sold to UK investors. Given the importance of funds domiciled in the EEA to the UK market, it was determined that an equivalence assessment of the EEA would be the first to be conducted under this regime.
Today I can confirm that, following a detailed assessment, the Government have found the EEA states, including the EU member states, equivalent under the OFR. To enact this decision, secondary legislation will be required, when parliamentary time allows. The Government do not intend to require the funds assessed to comply with any additional UK requirements as part of this equivalence determination at this time.
This decision will apply to undertakings for the collective investment in transferable securities except those which are also money market funds, as there is ongoing regulatory development in this area.
In accordance with the principles set out in the guidance document for the UK’s equivalence framework for financial services, the UK will monitor this equivalence decision on an ongoing basis, in light of UK and EEA regulatory developments.
Separate to the assessment of the EEA, the Government recognise that there are ongoing regulatory developments in relation to sustainable disclosure requirements. The Government intend to consult on whether to broaden the scope of SDR to include funds recognised under the OFR. The Government will ensure that there is adequate time for industry to adapt to any future requirements.
Currently, EEA funds which were marketing in the UK prior to EU exit are able to continue doing so under temporary arrangements. This arrangement was due to expire at the end of 2025.
Today, I can also confirm the Government’s intention to extend this arrangement until the end of 2026, to ensure funds are able to smoothly transition to the OFR.
Today’s announcements demonstrate the Government’s commitment to maintaining a safe, open and globally integrated financial system, enabling international financial services business by reducing barriers and frictions, where safe and practicable.
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