COLL 1 Introduction

1. (1)

   This sourcebook, except for COLL 9 (Recognised schemes), applies to:

   1. (a)

      investment companies with variable capital (ICVCs);

   2. (b)

      ACDs, other directors and depositaries of ICVCs;

   3. (c)

      managers and trustees of authorised unit trust schemes (AUTs); and

   4. (cA)

      authorised fund managers, depositaries and nominated partners of authorised contractual schemes (ACSs).

   5. (d)

      [deleted]

2. (2)

   COLL 9 applies to operators of schemes that are recognised schemes and to those seeking to secure recognised status for such schemes.

3. (3)

   COLL 11.5 (Auditors) also applies to auditors of master UCITS and feeder UCITS which are UCITS schemes.

4. (4)

   [deleted]

5. (5)

   COLL TP 1.1(48) contains transitional provisions that apply in relation to any scheme that will need to become a regulated money market fund in accordance with the Money Market Funds Regulation, and which operates as a scheme prior to 21 July 2018.

1. (1)

   The general purpose of this sourcebook is to contribute to the FCA meeting its statutory objectives of the protection of consumers. It provides a regime of product regulation for authorised funds, which sets appropriate standards of protection for investors by specifying a number of features of those products and how they are to be operated.

2. (2)

   In addition, this sourcebook implemented part of the requirements of the UCITS Directive relevant to authorised funds and management companies, along with other requirements implemented in other parts of the Handbook.

The Collective Investment Schemes Information Guide COLLG provides some general background material on the regulatory structure surrounding scheme regulation in the UK.

Any authorised fund, except for an ACS that is a limited partnership scheme, may be structured as an umbrella with separate sub-funds.

1. (1)

   UCITS schemes must in particular comply with:

   1. (a)

      COLL 3.2.8 R (UCITS obligations); and

   2. (b)

      the investment and borrowing powers rules for UCITS schemes set out in COLL 5.2 to COLL 5.5 .

2. (2)
   1. (a)

      Non-UCITS retail schemes are schemes that do not comply with all the conditions necessary to be a UCITS scheme.

   2. (b)

      A non-UCITS retail scheme is an AIF and must be managed by an AIFM.

   3. (c)

      The UK may, under the legislation which implemented article 43 of AIFMD, impose stricter requirements on an AIFM or an AIF marketed to retail clients than the requirements that apply to an AIF marketed only to professional clients.

   4. (d)

      This sourcebook contains the stricter requirements for an AIF which is a non-UCITS retail scheme.

   5. (e)

      A full-scope UK AIFM must also comply with the requirements in FUND and any other applicable provisions of AIFMD.

   6. (f)

      Non-UCITS retail schemes could become UCITS schemes, provided they are changed, so as to comply with the necessary conditions.

   7. (g)

      Non-UCITS retail schemes operating as FAIFs have wider powers to invest in collective investment schemes than other non-UCITS retail schemes.

3. (2A)

   A non-UCITS retail scheme may also be structured as an umbrella with sub-funds operating as:

   1. (a)

      FAIFs;

   2. (b)

      standard non-UCITS retail schemes; or

   3. (c)

      a mixture of (a) and (b).

      In these cases, rules relating to investment powers and borrowing limits apply to each sub-fund as they would to a scheme.

4. (3)
   1. (a)

      Qualified investor schemes may be promoted only to:

      1. (i)

         professional clients; and

      2. (ii)

         retail clients who are sophisticated investors,

      on the same terms as non-mainstream pooled investments (see COBS 4.12B (Promotion of non-mass market investments)).

   2. (b)

      A qualified investor scheme is an AIF and must be managed by an AIFM.

   3. (c)

      [deleted]

   4. (d)

      This sourcebook contains the stricter requirements for an AIF which is a qualified investor scheme.

   5. (e)

      A full-scope UK AIFM must also comply with the requirements in FUND and any other applicable provisions of AIFMD.

   6. (f)

      Qualified investor schemes could change to become non-UCITS retail schemes or UCITS schemes.

5. (3A)
   1. (a)

      A long-term asset fund may be promoted only to:

      1. (i)

         professional clients; and

      2. (ii)

         retail clients who are sophisticated investors, certified high net worth investors, and those other retail clients to whom units in long-term asset funds can be promoted without contravening the rules in COBS 4.12A (Promotion of restricted mass market investments).

   2. (b)

      A long-term asset fund is an AIF and must be managed by a full-scope UK AIFM (see COLL 15.2.2R (Authorised fund manager to be a full-scope UK AIFM)).

   3. (c)

      Under the Act and the UK AIFM regime, the FCA is able to impose stricter requirements on an AIFM or an AIF marketed to retail clients than the requirements that apply to an AIF marketed only to professional clients. This sourcebook contains stricter requirements for an AIF which is a long-term asset fund.

   4. (d)

      A full-scope UK AIFM must also comply with the requirements in FUND and any other applicable provisions of the UK AIFM regime.

   5. (e)

      A long-term asset fund could change to become a qualified investor scheme, a non-UCITS retail scheme or a UCITS scheme, provided it complies with the necessary conditions. The authorised fund manager of an LTAF may need to make significant changes to the LTAF’s constitution, objectives and investment powers for it to become a UCITS scheme or a non-UCITS retail scheme.

   6. (f)

      A qualified investor scheme could become authorised as a long-term asset fund if the authorised fund manager operates, or proposes to operate, the scheme in accordance with the rules in COLL 15 (Long-term asset funds).

   7. (g)

      The nature of the assets that are held (or expected to be held) by a long-term asset fund means that it will not be able to seek authorisation as a regulated money market fund, or to have the characteristics of such a fund without significant changes to its constitution, objectives and investment powers. See also article 6 of the Money Market Funds Regulation.

6. (4)

   The changes referred to in (2), (3) and (3A) require approval by the FCA.

1. (1)

   Except for (2), all provisions of the Handbook that apply:

   1. (a)

      to a feeder UCITS are also applicable to a pension feeder fund that is constituted as a UCITS scheme; and

   2. (b)

      to a feeder NURS are also applicable to a pension feeder fund that is constituted as a non-UCITS retail scheme.

2. (2)

   A pension feeder fund may not invest in units of an EEA UCITS scheme unless that scheme is a recognised scheme (see COLL 5.6.27R and COLL 5.8.2AR).