The regulator has confirmed the policy of introducing retail-oriented funds of alternative investment funds (FAIFs) into its regulatory regime.
It has built additional consumer protection measures including requirements that FAIF managers carry out initial and ongoing due diligence to determine that the assets in the underlying scheme are held by a third party independently of its manager and the valuation of schemes within a FAIF and the maintenance of a fund’s accounting records are segregated from the scheme’s investment management process.
The new regime will come into effect on March 6.
FSA director retail policy and themes and asset management sector leader Dan Waters says: “Permitting consumers access to a wider range of innovative investment strategies through authorised onshore vehicles will allow more choice and a better opportunity for risk diversification, while maintaining consumer protection through our proportionate rules on the operation of the product.”
The Investment Management Association has welcomed the new rules.
Director of authorised funds and tax Julie Patterson says: “The introduction of FAIFs is good news for product innovation and investor choice because it enables investors to gain access to a wider range of investments. We also welcome the production by the FSA of a factsheet on FAIFs for intermediaries. The new regime will enhance the UK’s position as a domicile for a wider range of funds.”