Important Information regarding the FCA Overseas Fund Regime (OFR)
The OFR is a new set of rules to allow certain investment funds established outside the UK to be promoted in the UK, including to retail clients.
If a fund applies for and is given 'recognised scheme' status under the OFR, it can be promoted in the same way as an authorised collective investment scheme established in the UK.
It’s based on principles of equivalence, meaning that funds from jurisdictions with similar regulatory standards to the UK can be recognised and marketed in the UK.
Under the new rules there are important changes to FSCS Protection and FOS Rights that will impact investors, detailed below:
- FSCS Protection: Overseas funds recognised under the OFR may not be covered by the UK's Financial Services Compensation Scheme (FSCS). This means that if the fund fails, UK investors may not be able to claim compensation from the FSCS.
- FOS Rights: Similarly, investors in OFR-recognised funds may not have access to the Financial Ombudsman Service (FOS) for dispute resolution. Instead, they may need to rely on any alternative dispute resolution mechanisms available in the fund's home jurisdiction.
The FCA has introduced disclosure requirements to ensure UK investors are made aware of the protections they have, or do not have, along with guidance relating to the information that needs to be disclosed in the prospectus and supplementary point-of-sale information.