FCA leaves real estate funds in limbo for lack of date for new rules

Confusion still reigns over the future of open-ended property funds after the Financial Conduct Authority said it was still considering next steps following an industry consultation.

In the latest grid of regulatory initiatives, the FCA confirmed that it had published its comments on the proposal to introduce notice periods for funds, but gave no further information on when it will publish the next steps of the consultation.

The watchdog said last May that it would not confirm specific rules for the property fund until a consultation on the long-term asset fund was completed.

This was concluded in October and the regulator has not given further details at this time.

One of the solutions put forward by the regulator in the consultation was the introduction of notice periods for redemptions, either on certain days of the year or at a specific time after a withdrawal request has been made.

However, this presents a headache for platform providers who currently lack the functionality to meet notice periods for takeovers.

Last week, AJ Bell’s head of investment research, Ryan Hughes, said the sector was in a “state of paralysis” due to the watchdog’s lack of updates.

Sustainability labels

In its latest publication, the city’s watchdog said it would release a consultation paper on sustainability disclosure requirements, including sustainability investment labels, in July this year.

The European regulation on sustainable finance disclosure, which came into force at the beginning of 2021, already imposes sustainability requirements on advisors.

However, its rules were not incorporated until the UK’s exit from the EU.

The FCA is now introducing its own sustainability disclosure requirements for companies involved in investment management and decision-making processes.

Plans to classify sustainable investments into separate groups could also be aligned with existing SFDR categories, the regulator said in its working paper late last year.

The changes will specifically focus on sustainable investment labels, consumer-facing information for investment products, client and consumer-facing entities, and product-level information by asset managers and owners. FCA Regulated Assets.

The labels and criteria are intended to help consumers navigate their sustainability characteristics and the feedback received will guide the design of FCA’s policy in this area, ahead of consultation on the new proposals in the spring of next year.

Business Reviews

The grid also indicated that the boards’ past activity reviews on the transfer of defined benefit pension plans will be mostly completed this year.

The FCA has said that while reviews are expected to continue until autumn 2023, there will be “substantial completion” by autumn of this year.

Final guidance on the consumer requirement will be issued between July and September this year, with companies having until the second quarter of next year to implement the changes, the FCA said.

Finally, the regulator said it intends to publish the consultation on Isa investment pathways this quarter.

sally.hickey@ft.com