On 5 July 2016, three of the UK's largest Real Estate Funds froze around £9bn of assets after Britain voted to leave the EU. Further to that, on 6 July 2016, three other funds followed. The vote sparked a bout of redemption requests from investors. This has already led to scrutiny of Property Funds, and their management, by the FCA. The governance of the funds, and also the directors and corporate service providers involved, will inevitably be under the spotlight.

All these funds have suspended redemptions, reportedly because they lack sufficient liquidity to repay investors following a fall in property related shares in the wake of the referendum. Whilst the fund suspensions may well be temporary, uncertainty over Brexit fears may lead to ongoing investment concerns in this sector.

Fear about Britain's impending exit from the EU has led to a rush by investors to redeem their sums from the funds. This has been compounded by a reduction in investments into the funds. Where there is insufficient liquidity to meet redemption requests, suspension is the customary response to ensure an orderly management of the funds in these circumstances.

In recent times Property Funds have been a popular haven for investors, including retail investors, as they can provide attractive returns in a low interest rate environment. While suspension in itself may not cause losses, investors are on notice of possible difficulties in realising their investments. If losses are sustained, retail investors are likely to question the suitability of the investments. The difficulty often arises where underlying investments are illiquid, which can make them unsuitable for retail investors if their risk profile has not been accurately assessed or they have not been provided with suitable warnings. If this proves to be the case, investors can be expected to look to their financial advisers to meet any shortfall.

Throughout the financial crisis of 2008 a number of real estate funds were frozen after redemption requests put the funds under pressure. This resulted in the appointment of administrators to manage the funds and protect the assets for the overall benefit of investors.

The FCA's Chief Executive, Mr Andrew Bailey, has stated that the FCA will be investigating the funds that have recently been suspended.

Insurers will be familiar with the regulatory investigations that can follow fund suspensions. Insurers will need to keep a close eye on these funds, and others that may follow suit, as the impact of Brexit continues to unfold.