This chapter applies as follows:
COLL 9.3 and COLL 9.4 apply to operators of schemes applying for recognition under section 272 of the Act and to operators making a notification in respect of such schemes under sections 277 and 277A of the Act.
COLL 9.5 applies to operators of schemes applying for recognition as OFR recognised schemes and to operators making a notification in respect of such schemes under sections 271I and 271J of the Act.
This chapter applies in relation to 2 types of recognised scheme:
a scheme which is individually recognised under section 272 of the Act; and
an OFR recognised scheme, which is a scheme recognised under section 271A of the Act.
If a scheme is eligible to apply for recognition as an OFR recognised scheme, it may not apply for recognition under section 272 of the Act, within (1)(a).
This chapter enables current and potential operators of recognised schemes to know what information and documents the FCA requires to enable it to determine whether to recognise the scheme under the Act for marketing in the United Kingdom.
This chapter also sets out requirements relating to:
the preparation and maintenance of a prospectus for a recognised scheme; and
the facilities that an operator of a recognised scheme must provide to enable current and potential participants in the scheme who are present in the United Kingdom to obtain information and exercise their rights without undue difficulty or expense.
The effect of GEN 2.2.32R to GEN 2.2.36G and COLL TP 1.1R(65) is that the rules in COLL 9.4 on facilities continue to apply to a TP UCITS qualifier in relation to a scheme that is a recognised scheme under Part 6 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019, until such time as that scheme ceases to be a recognised scheme under those Regulations.
The FCA website sets out further information about which categories of overseas collective investment scheme are eligible to apply to the FCA to be recognised schemes under sections 271A and 272 of the Act, how to apply for recognition, and how to give notifications concerning recognised schemes.
https://www.fca.org.uk/firms/authorised-recognised-funds/apply-fund-recognition
(1)
If the operator of a scheme makes an application under section 272 of the Act (Individually recognised overseas schemes), the application must include the information in paragraph (4).
(2)
The documents must be in English or accompanied by a translation in English.
(3)
The documents must be certified by the operator to be true copies of the originals.
(4)
The operator of the scheme must provide the following information and documents with the application:
(a)
the name of the scheme;
(b)
the legal form of the scheme;
(c)
the name and address of the operator;
(d)
the address of the place in the United Kingdom for service on the operator of notices or other documents;
(e)
whether the operator intends to market the scheme in the United Kingdom in a manner which will involve it carrying on a regulated activity in the United Kingdom;
(f)
the name and address of any person to whom the property subject to the scheme is entrusted for safekeeping;
(g)
the address of the place in the United Kingdom where scheme facilities (see COLL 9.4) will be maintained;
(h)
details of the arrangements for the marketing of units in the United Kingdom, namely:
(i)
the proposed commencement date;
(ii)
whether the units will be sold by or through any employed sales force, authorised persons, or unsolicited calls;
(i)
a copy of the instrument constituting the fund;
(j)
a copy of the prospectus or any similar document giving details of the scheme;
(k)
a copy of the latest annual report and any subsequent half-yearly report;
(l)
a copy of any other document affecting the rights of participants in the scheme; and
(m)
(where applicable) a product summary (see DISC).
An operator of a scheme applying for recognition under section 272 of the Act must ensure the prospectus:
contains a statement that "Complaints about the operation of the scheme may be made to the FCA."; and
states whether or not investors in the scheme would be covered by the compensation scheme, and if so, it must state how they are covered and who they would need to contact for further information.
An operator of a scheme recognised under section 272 of the Act must comply with the requirements set out in COLL 4.2 (Pre-sale notifications).
Where a scheme recognised under section 272 of the Act is managed and authorised in Guernsey, Jersey, or the Isle of Man, the prospectus need not comply with the requirements of COLL 4.2.5 R (Table: contents of prospectus), providing it contains corresponding matter required under the law in its home territory.
(1)
DISC requires the manufacturer of a consumer composite investment to prepare a product summary before that consumer composite investment is made available for distribution to retail investors.
(2)
[deleted]
(3)
As a result, when a scheme recognised under section 272 of the Act is made available for distribution to retail investors the manufacturer of the recognised scheme must prepare a product summary.
An operator of a scheme recognised under section 272 of the Act must provide a certificate to the FCA in writing that:
sets out what steps it has taken to inform itself of any changes to the regulatory requirements for the relevant type of comparable authorised scheme taking effect during the most recent financial year of the scheme; and
explains whether, and if so how, any such changes, together with any changes to the scheme that have occurred during this period, may affect the scheme’s ability to satisfy the requirements referred to in section 272(1)(d) of the Act.
The certificate must be provided to the FCA no later than:
one month following the publication of the annual report and accounts of the scheme; or
if the publication of the annual report and accounts of the scheme is delayed, one month after the last day on which the publication of the annual report and accounts of the scheme was due.
The certificate must be signed by an authorised signatory of the operator.
The certificate may apply to multiple sub-funds in an umbrella that are recognised under section 272 of the Act, if the names of each relevant sub-fund and of the umbrella are clearly stated.
The certificate must be delivered to the FCA by:
sending a copy by email addressed to recognisedcis@fca.org.uk, including the subject line: “S.277A Certificate – [insert full name(s) of scheme]”; or
by post to: Financial Conduct Authority, attn. S.277A Certificates, Fund Authorisations Team, Asset Management Department, Wholesale Supervision, 12 Endeavour Square, London E20 1JN, United Kingdom.
An operator of a scheme recognised under section 272 of the Act need not provide a certificate under COLL 9.3.5D if it has already sent the required information to the FCA within the last 12 months as the result of:
a requirement relating to an application for recognition of the scheme under section 274(2)(c) of the Act;
a direction relating to a proposed alteration of the scheme or to a change to the operator, trustee or depositary under section 277(5)(b) of the Act; or
a previous certificate being provided under section 277A of the Act.
The operator of a scheme recognised under section 272 of the Act should seek advice from professionals with appropriate qualifications or professional knowledge, such as a qualified solicitor, chartered accountant or compliance consultant, before submitting the certificate to the FCA under COLL 9.3.5D.
Section 277(1) of the Act (Alteration of schemes and changes of operator, trustee or depositary) requires notification by the operator to the FCA of certain proposed alterations to a scheme recognised under section 272 of the Act which, if made, would be a material alteration. The types of alterations that constitute, or are likely to constitute, a material alteration are set out at COLL 9.3.10R and COLL 9.3.11G.
For the purposes of section 277(1), a material alteration is an alteration which:
changes the purpose or nature of the scheme;
alters the risk profile of the scheme;
may materially prejudice a participant in the scheme;
affects the ability of participants in the scheme to exercise their rights in relation to their investments;
introduces any new type of payment or materially increases other types of payment that a participant in the scheme would have to pay out of scheme property;
changes the legal form of the scheme;
changes the name of the scheme or the name of the umbrella of which a sub-fund is a part;
will result in the restructuring of the scheme or a merger with another scheme;
changes the regulatory status of the scheme;
changes the regulatory status of the operator or, if the scheme has a depositary, of the depositary;
changes the composition of the board of directors, committee of management or other governing body of the scheme, if it has one; or
otherwise has a material effect on the scheme and its participants.
For the purpose of COLL 9.3.10R, a material alteration is likely to include:
any material changes to the investment objective or policy;
any change to the investment strategy that involves taking exposure to a new class of assets with a different risk profile;
any change affecting arrangements for the redemption of units on behalf of participants, including any arrangements to sell units on an investment exchange;
any change to the facilities maintained in the United Kingdom, including marketing arrangements, in accordance with COLL 9.4; and
any expansion or limitation of the powers and duties of the operator or, if the scheme has a depositary, of the depositary.
In addition to the particular matters specified in COLL 9.3.10R(1) to (11), COLL 9.3.10R(12) requires the operator of a scheme recognised under section 272 to notify the FCA of any other change which has a material effect on the scheme and its participants. Any change may be a material alteration depending on its degree of materiality and its effect on the scheme and its participants. Consequently, an operator will need to determine whether in each case a particular change is a material alteration or not.
Section 282C of the Act (Recognition of parts of schemes under section 272) sets out that section 272(1) of the Act may apply in relation to part of a collective investment scheme as it applies in relation to such a scheme. In our view, this means that the FCA is able to recognise one or more but not necessarily all sub-funds in an umbrella.
As a result, references to a scheme in COLL 9.3.8G to COLL 9.3.12G include references to a sub-fund in an umbrella.
The operator of a scheme recognised under section 272 of the Act must maintain facilities in the United Kingdom in order to satisfy the requirements of COLL 9.4.2 R to COLL 9.4.6 R.
In this section, a facility is a place of business that complies with COLL 9.4.6 R (Place of facilities).
(1)
The operator of a scheme recognised under section 272 of the Act must maintain facilities in the United Kingdom for any person, for inspection (free of charge) and for the obtaining (free of charge, in the case of the documents at (c), (d) and (e), and otherwise at no more than a reasonable charge) of copies in English of:
(a)
(b)
any instrument amending the instrument constituting the fund;
(c)
the latest prospectus (which must include the address where the facilities are maintained and details of those facilities);
(d)
product summary for the scheme in respect of retail investors; and
(e)
the latest annual and half-yearly reports.
(1A)
[deleted]
(2)
In relation to notices and documents sent by operators and depositaries to and from the United Kingdom, COLL 4.4.12 R (Notice to Unitholders) and COLL 4.4.13 R (Other notices) apply.
The operator must maintain facilities in the United Kingdom for any person where:
information in English can be obtained about prices of units in the scheme; and
a participant may redeem or arrange for redemption of units in the scheme and obtain payment.
An operator is treated as complying with paragraph (1) if it ensures participants may sell their units on an investment exchange at a price not significantly different from net asset value; and if so, must inform participants of the investment exchange.
The operator must maintain facilities in the United Kingdom, at which any person who has a complaint to make about the operation of the scheme can submit his complaint for transmission to the operator.
The address of the facilities maintained by the operator in accordance with this section and the details of the facilities so maintained must be stated in the prospectus of the scheme.
The address of the facilities referred to in (1) must be the address of the operator's principal place of business in the United Kingdom, or, if there is no such address,such other address in the United Kingdom where the operator can be contacted.
[deleted]
Under the Act, the FCA has the power to direct how an application for recognition of a scheme under section 271A of the Act must be made. The FCA also has the power to specify that the application contains, or is accompanied by, such information as the FCA may reasonably require for the purpose of determining it.
The application form for recognition of a scheme under section 271A of the Act, and guidance regarding documents and information which must be contained in (or provided together with) the application form, are available on the FCA website.
https://www.fca.org.uk/firms/overseas-funds-regime-update-firms
The application form requires the operator that is applying for recognition of the scheme to provide documents and information falling within the following categories:
The FCA considers that the documents and information falling within the categories set out in COLL 9.5.1G(3) are reasonably required for the purposes of:
determining whether the conditions for recognition under section 271G(2) (Determination of applications) of the Act are met;
complying with its duty under section 271G(4) (Determination of applications) of the Act to refuse an application for recognition if the FCA considers it desirable to do so, in order to protect the interests of participants or potential participants in the scheme in the United Kingdom; and
complying with its duty to maintain a record of all recognised schemes under section 347 (The record of authorised persons etc.) of the Act, which is made public in the Financial Services Register.
Section 271S of the Act (Recognition of parts of schemes under section 271A) sets out that section 271A of the Act applies in relation to part of a collective investment scheme as it applies in relation to such a scheme. In our view, this means that the FCA is able to recognise one or more sub-funds in an umbrella, without necessarily recognising all of them.
As a result, references to a scheme in COLL 9.5.9G to COLL 9.5.10G and to an OFR recognised scheme in Part 17 of the Act include references to a sub-fund in an umbrella.
The operator of an OFR recognised scheme must comply with the following requirements in COLL 4.2 (Pre-sale notifications):
COLL 4.2.2R(2)(b) to (d);
COLL 4.2.3AR; and
The operator of an OFR recognised scheme must ensure that the prospectus of the scheme contains the information required by COLL 4.2.5R (Table: contents of the prospectus) to the extent that this information would be compatible with the basis upon which the prospectus is approved in the scheme’s Home State.
In relation to (2), information is to be treated as incompatible with the basis upon which the prospectus is approved in the scheme’s Home State if adding it to the prospectus conflicts with an existing statement that has already been approved by the regulatory body of the scheme’s Home State.
For the purposes of (1) and (2), as appropriate, a reference in COLL 4.2 to:
an authorised fund manager is to be read as a reference to an operator of an OFR recognised scheme; and
an authorised fund, AUT, ACS, ICVC and UCITS scheme is to be read as a reference to an OFR recognised scheme.
The operator of an OFR recognised scheme must ensure that the prospectus of the scheme:
explains how investors in the United Kingdom can make a complaint about the scheme, its operator or its depositary;
explains whether the activities of the operator and depositary of the scheme are covered by the Financial Ombudsman Service and the compensation scheme; and
where they are not covered, contains a clear warning explaining that a UK investor may not be able to seek redress under the UK regulatory system for a complaint, or compensation for a financial loss suffered as a result of the operator or depositary being unable to meet their liabilities to unitholders;
explains whether or not an investor in the United Kingdom has the right to access:
an alternative dispute resolution mechanism in the Home State(s) of the scheme, its operator or its depositary in order to resolve a complaint; or
a compensation scheme in the Home State(s) of the operator or the depositary that can pay compensation to unitholders for losses incurred where those persons are unable to meet their liabilities to unitholders; and
explains, if the investor has the rights described in (3), how they may be exercised, including how further information may be obtained.
If the investor has any rights described in COLL 9.5.6R(3), operators of OFR recognised schemes should consider including further information likely to be useful to investors.
Further information likely to be useful to investors would at least include details as to:
whether investors are able to make a complaint or request for compensation in English to the respective bodies referred to in COLL 9.5.6R(3);
whether there is a cost to make a complaint or request for compensation to the respective bodies referred to in COLL 9.5.6R(3);
whether investors would be exposed to any requirement to pay costs by either of the respective bodies referred to in COLL 9.5.6R(3) – for example, if their complaint or request for compensation should be unsuccessful;
what the maximum financial limits are for awards of redress or compensation by the respective bodies referred to in COLL 9.5.6R(3); and
whether the decision by the body referred to in COLL 9.5.6R(3)(a), such as the amount of redress that should be paid in relation to the complaint, is binding on the operator or depositary (as applicable) if accepted by the investor.
Where the prospectus of the scheme is provided electronically, such further information could be provided via a hyperlink to a website or another document.
(1) DISC requires the manufacturer of a consumer composite investment to prepare a product summary before that consumer composite investment is made available for distribution to retail investors.
(2) As a result, when an OFR recognised scheme is made available to retail investors, the manufacturer of the OFR recognised scheme must prepare a product summary.
Section 271I(1) of the Act (Obligations of an operator of a section 271A scheme) requires an operator of an OFR recognised scheme to notify the FCA if it has contravened, or expects to contravene, a requirement imposed on it by or under the Act.
Section 271I(2) of the Act requires an operator of an OFR recognised scheme to notify the FCA of certain changes relating to the scheme, such as changes to the operator or depositary. This should be kept in mind when considering any proposed change.
Section 271I(3) of the Act requires a notification under (1) or (2) to be made in writing as soon as reasonably practicable.
Section 271J of the Act provides that the operator of an OFR recognised scheme must provide to the FCA such information as the FCA may direct, and in such form and at such times as it may direct. The FCA will publish such directions on the FCA website.
The information must be provided as soon as reasonably practicable, in the manner directed on the website. In a few cases, listed on the website, the FCA’s direction requires the operator to notify the FCA by email at the address specified for that purpose. In all other cases, the information should be provided by submitting a standard form.
The operator of an OFR recognised scheme must notify the FCA as soon as reasonably practicable when the operator of an OFR recognised scheme:
decides to terminate or wind up the scheme, or becomes aware that the scheme is or will be terminated or wound up; or
decides to cease marketing the scheme in the United Kingdom.
Where COLL 9.5.11D(2) applies, the operator should request the FCA to withdraw recognition as an OFR recognised scheme. The operator should ensure that UK investors are given adequate written notice of the decision before the date on which the request takes effect.
(1)
The operator of an OFR recognised scheme must maintain facilities for any person in the United Kingdom to:
(a)
inspect (free of charge) up-to-date copies in English of:
(i)
the instrument constituting the fund, as amended from time to time;
(ii)
the prospectus;
(iii)
the latest annual report and (if more recent) the half-yearly report; and
(iv)
(in respect of retail investors only) a product summary or equivalent disclosure document;
(b)
obtain paper copies of any of the documents in (a), at no more than a reasonable charge in the case of (i), and free of charge in the other cases; and
(c)
obtain the latest prices of units in the scheme, or information about where they can be obtained free of charge.
(2)
The operator of an OFR recognised scheme must maintain facilities for any unitholder of the scheme in the United Kingdom to:
(a)
submit orders to subscribe for and redeem units in the scheme in accordance with the terms of its prospectus;
(b)
obtain information about how any payment due to the unitholder will be made;
(c)
provide information to enable the operator to maintain a record of each unitholder’s full name and address and any other required details; and
(d)
submit a complaint about the operation of the scheme to the operator and obtain information about arrangements for the resolution of the complaint.
The operator may provide the facilities in COLL 9.5.13R through an electronic medium where:
the prospectus states that the operator will normally communicate with all unitholders and their representatives through such a medium;
unitholders have consented to the operator communicating with them in this way; and
all services to unitholders are provided in English, free of charge.
If the conditions in (1)(a) and (b) are not fulfilled, the operator may provide the facilities in COLL 9.5.13R through an electronic medium at the unitholder’s choice but must additionally provide those facilities at a place in the United Kingdom which is open to members of the public during business hours.
The operator may use its own place of business in the United Kingdom if it has one, or else it must appoint a person with a place of business in the United Kingdom to provide the facilities on its behalf.
The prospectus of the scheme must state the address of the place at which facilities are provided or explain how they can be accessed through an electronic medium.
In relation to notices and documents sent by operators and depositaries to and from the United Kingdom, COLL 4.4.12R (Notice to unitholders) and COLL 4.4.13R (Other notices) apply.
Under section 271F(1)(b) of the Act, the operator of an OFR recognised scheme must notify the FCA of an address in the United Kingdom at which notices and other documents may be served on the operator. This may be the same address specified for the purpose of COLL 9.5.14R(2), or another address.
Where the operator of an OFR recognised scheme intends to communicate a financial promotion relating to the scheme, the financial promotion will need to be approved unless the financial promotion benefits from an exemption in the Financial Promotion Order.
If the financial promotion does not benefit from an exemption in the Financial Promotion Order, an authorised person will only be able to approve a financial promotion relating to an OFR recognised scheme if:
that person is a permitted approver in relation to the financial promotion; or
an approver permission exemption applies.
Where a financial promotion relating to an OFR recognised scheme needs to be approved by an authorised person, that authorised person does not need to be the person who provides unitholder facilities, or whose address is notified for the service of notices.
