Important information regarding the Financial Conduct Authority (FCA) Overseas Fund Regime (OFR)
The OFR has introduced a new framework that allows certain overseas investment funds to be marketed to UK investors, similar to UK-based funds.
To qualify, funds must apply to the FCA for recognition. These funds must meet specific standards set by the UK government and the FCA, ensuring they are safe and suitable for UK investors. Once approved, these funds can be promoted to UK investors.
Key changes under the OFR:
Financial Services Compensation Scheme (FSCS) Protection: Overseas funds recognized under the OFR are unlikely to be covered by the UK's FSCS. This means that if the fund fails, UK investors may not be able to claim compensation from the FSCS.
Financial Ombudsman Service (FOS) Rights: Investors in OFR-recognized funds are unlikely to have access to the FOS for dispute resolution. Instead, they may need to rely on alternative dispute resolution mechanisms available in the fund's home jurisdiction.
The FCA has introduced disclosure requirements to ensure UK investors are aware of the protection they have, or do not have. This includes guidance on the information that needs to be disclosed in the prospectus and supplementary point-of-sale information.
Please speak to an adviser if you need any further information on this topic.