On October 31, HM Treasury published its response (Response) to the consultation it conducted in Q4 2015 (Consultation) on the United Kingdom’s implementation of the UCITS V Directive (2014/91/EU) (UCITS V). The objective of UCITS V was to make certain changes to the existing UCITS legislative framework to assist in further enhancing the global appeal of the UCITS brand for investors.
The implementation of UCITS V in the United Kingdom was divided between HM Treasury, which was responsible for parts of UCITS V that are more structural in nature, and the Financial Conduct Authority (FCA), which was responsible for implementing changes to the FCA rules and guidance that directly impact industry and investors.
The Consultation by HM Treasury specifically considered the proposed reforms to the UCITS legislative framework proposed relating to:
- depositories (specifically with respect to eligibility to act, delegation and liability for fund assets);
- manager remuneration (to promote sound principles of risk management and discourage excessive risk-taking, ultimately with the intention of creating a uniform standard within the European Union); and
- harmonization of national sanction regimes within the European Union.
The Consultation proposed the legislative action that HM Treasury planned to take to transpose those parts of UCITS V pertinent to those matters set out above, as well as included a draft statutory instrument (Undertakings for Collective Investment in Transferable Securities Regulations 2016) that incorporated the proposed amendments to relevant UK primary and related secondary legislation for doing so. In its proposals, HM Treasury sought to ensure that the objectives set out in UCITS V were adhered to while also ensuring that its actions had minimal impact on industry by avoiding “gold plating,” where possible. Separately, the FCA also published a consultation on proposed changes to the FCA rules and guidance as a consequence of UCITS V for comment by industry and investors. Similarly to that taken by HM Treasury, the FCA’s approach with respect to the implementation of UCITS V was to apply an “intelligent copy-out” so as to implement the Directive in full without augmentation (or gold plating).
The Response summarized those responses received by HM Treasury to the Consultation and confirmed that no changes were required to be made based on them. Accordingly, the Undertakings in Collective Investment in Transferable Securities Regulations 2016 (2016/225) implementing the above, which came into effect in the United Kingdom on March 18 and was consistent with the draft previously circulated as part of the Consultation, required no further amendment.