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Detail of outcome
The Treasury received responses from a wide range of stakeholders. A list of respondents can be found in Annex A. This response document summarises the main issues raised by respondents under the consultation questions and outlines the government’s response to these. Amended regulations can be found below. We are very grateful to those who took the time to respond to this consultation.
The Alternative Investment Fund Managers Directive is due to be transposed into national law by 22 July 2013. The Directive will have a significant impact on firms that run any type of fund other than those authorised under UCITS and provides a number of opportunities and obligations for those firms. The government published its first consultation paper on 11 January and this closed at the end of February. This consultation paper considers a number of issues that could not be addressed at that time. The Financial Services Authority (FSA) is also separately consulting on the rules required as part of the transposition. This is a short consultation, reflecting the limited number of issues addressed and the strong need expressed by industry for certainty over the final regulations.
The Directive establishes an EU-wide harmonised framework for monitoring and supervising risks posed by Alternative Investment Fund Managers and the funds they manage. The Directive covers many different types of asset manager, including managers of hedge funds, private equity funds, retail investment funds, investment companies, and real estate funds as well as common investment funds and common deposit funds. The Directive will be implemented, like other EU financial services directives, through a combination of Treasury regulations and FSA rules.
The policies addressed in this consultation are focused in particular on the managers of Common Investment Funds and Common Deposit Funds and their charity investors, non-UK managers of UK ‘recognised schemes’, and non-UK EEA managers of UK authorised funds. There is also an impact on the managers of internally managed investment companies.
Draft regulations accompany this consultation paper and these are intended to be combined with the draft regulations attached to the first consultation paper.
Transposition into UK law will require a further set of policy decisions which could not be consulted on in time for the first consultation paper. These policy issues are:
- treatment of Common Investment Funds and Common Deposit Funds under the Directive
- reform of Section 270 and Section 272 of the Financial Services and Markets Act 2000
- a proposal not to introduce the Approved Persons Regime for Internally Managed Investment Companies
- coverage of the Financial Services Compensation Scheme for non-UK EEA managers of UK authorised funds
The government’s overall approach is intended to enhance the UK’s competitiveness as a centre for fund management and domicile, to ensure strong consumer protection, and to enhance confidence in the regulatory system. The government welcomes views from market participants including managers, retail investors and investment intermediaries on how best to achieve these aims and also invites comments on the accompanying draft regulations.
In addition to this further consultation paper, the Financial Services Authority will also shortly be publishing a second paper. Some of the issues covered in that paper should be taken in conjunction with those raised in this paper.