The FSA has delayed plans to develop funds of alternative investment funds due to a number of taxation issues.
In an update statement, the FSA says it planned to issue a policy statement and final rules towards the end of this year to allow the development of funds of alternative investment funds, including funds of hedge funds.
However, in the course of its consultation, it identified a number of taxation issues involved in operating such a regime.
The regulator says the Treasury is considering these issues in conjunction with the offshore fund regime which is currently at discussion paper stage.
The FSA says it will delay its proposals until the situation is clearer in the new year.
Director of retail policy and themes Dan Waters says: “We recognise the difficulties of trying to resolve the complex issues raised by the offshore funds tax regime.
“We continue in our constructive discussions with the Treasury, however, and are working closely together to find a way for Faifs to operate competitively within the UK retail market. This provides an opportunity for further discussion and consideration before the final publication.”