© Reuters. FILE PHOTO: Bim Afolami MP speaks during Oral Questions for the Department for Energy Security and Net Zero at the House of Commons in London, Britain, February 28, 2023. UK Parliament/Jessica Taylor/Handout via REUTERS/File Photo
By Huw Jones
LONDON (Reuters) -Britain said on Tuesday it would grant long-term market access for EU-based investment funds used by UK investors, and without new costly requirements such as mandatory valuation assessments, triggering relief in the sector.
Funds known as UCITS are listed in Dublin and Luxembourg and are widely used by UK investors, but asset managers worried that obtaining long-term post-Brexit access to Britain could come with burdensome new requirements, such as having to re-assess the value of assets in their funds.
Britain’s financial services minister Bim Afolami said that following a detailed assessment, the government has found that EU funds are “equivalent”, meaning they operate under home rules that are robust enough to protect UK investors.
“The government does not intend to require the funds assessed to comply with any additional UK requirements as part of this equivalence determination,” Afolami said in a statement.
The equivalence decision, Britain’s first under its new post-Brexit Overseas Funds Regime, has been long awaited by the funds industry as many of the asset managers for EU-listed funds are based in Britain.
“We strongly welcome today’s confirmation from HM Treasury that UK investors will continue to benefit from the full range and choice of European funds, including exchange traded funds,” said Jonathan Lipkin, director of policy at the Investment Association, which represents asset managers in Britain.
“It also cements the UK’s place as the leading global centre for investment management.”
Secondary legislation would be needed to implement the equivalence decision, he said.
It replaces a system of temporary access permission, which was due to expire at the end of 2025, but will now be extended by a year to allow enough time to implement the legislation, Afolami said.
Britain’s asset management industry manages 37% of all assets managed in Europe.
The government has already indicated that UK investors in overseas funds, most of which are from the EU, will not be eligible for any compensation from Britain’s Financial Services Compensation Scheme.
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