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Status: You are viewing the version of the handbook as on 2009-03-31.

COLLG 3.1 Introduction

COLLG 3.1.1G

Part XVII of the Act deals specifically withcollective investment schemes. The main features and practical effects of Part XVII, and how the FSA exercises its responsibilities, are described below. References to sections are to the numbered sections of Part XVII.

Marketing of schemes in the UK (section 238)

COLLG 3.1.2G
  1. (1)

    Before a scheme can be promoted to the public in the UK, it must be authorised or recognised by the FSA (see COLLG 1.1.3 G (What are regulated collective investment schemes?)).

  2. (2)

    Only persons authorised under the Act can market authorised or recognised schemes to the public.

Application for authorisation (sections 242 and 243)

COLLG 3.1.3G
  1. (1)

    The FSA requires an application for authorisation of a unit trust scheme to be made jointly by the manager and trustee, who must be:

    1. (a)

      authorised persons under the Act with the appropriate Part IV permissions; and

    2. (b)

      independent of each other (see COLL 6.9 (Ongoing obligations) which provides guidance on independence).

    3. (c)

      [deleted]

    4. (d)

      [deleted]

    5. (e)

      [deleted]

    6. (f)

      [deleted]

    7. (g)

      [deleted]

  2. (2)

    The application must contain details of the manager and trustee, of the scheme itself, and of other persons to whom functions are to be delegated (e.g. the registrar and the investment adviser).

  3. (3)

    Application forms are available free of charge from the forms page at FSA/form_links.jsp#collAnc.

  4. (4)

    A fee is payable and must be submitted with the application (see FEES 1, FEES 2and FEES 3).

  5. (5)

    The following items must be provided with the application:

    1. (a)

      a copy of the trust deed;

    2. (b)

      a solicitor's certificate stating that the trust deed complies with the rules made under section 247 of the Act (Trust scheme rules);

    3. (c)

      a copy of the prospectus, with a checklist indicating the location of the information required by COLL to be contained in it;

    4. (d)

      in the case of a UCITS scheme, a copy of the simplified prospectus; and

    5. (e)

      if applicable, documents evidencing any guarantee arrangement.

  6. (6)

    The name of the scheme must not be undesirable or misleading and its purpose must be reasonably capable of being successfully carried into effect. COLL 6.9 (ongoing obligations) provides guidance on what the FSA considers undesirable or misleading names.

Determining and refusing applications (sections 244 and 245)

COLLG 3.1.3AG
  1. (1)

    Under section 244 of the Act (Determination of applications), the FSA has up to 6 months in which to consider a completed application following its receipt and must inform the manager and trustee of its decision within that timescale. In practice, the FSA aims to process 75% of completed applications relating to a UCITS scheme within 6 weeks. If the FSA is satisfied with the application, an authorisation order is issued for the scheme.

  2. (2)

    If the FSA proposes to refuse an application, it must give a warning notice which will contain the reasons for the refusal. If, having given the warning notice, it decides to refuse the application, a decision notice will be sent and the applicant may refer the matter to the Tribunal.

Revocation of authorisation (section 254)

COLLG 3.1.4G
  1. (1)

    The FSA can revoke an authorisation order declaring a unit trust scheme to be authorised if:

    1. (a)

      the requirements of authorisation are no longer satisfied; or

    2. (b)

      the manager or trustee has contravened any provision of the Act or any rules or regulations made under it, or has given false or misleading information to the FSA; or

    3. (c)

      no regulated activity is being carried on in relation to the scheme and the period of that inactivity began at least twelve months earlier; or

    4. (d)

      it is undesirable for investors or potential investors that the unit trust scheme should continue.

  2. (2)

    The FSA may refuse to revoke an authorisation order if it considers that:

    1. (a)

      any matter should be investigated prior to revocation;

    2. (b)

      revocation would not be in the interests of investors; or

    3. (c)

      revocation would be incompatible with the UCITS Directive.

  3. (3)

    If the FSA proposes to revoke an authorisation order, a separate warning notice will be sent to the manager and trustee. The same procedures as stated for refusal of authorisation, in relation to the warning notice and decision notice, will apply.

Notification of changes to unit trusts (section 251)

COLLG 3.1.5G
  1. (1)

    The manager must give written notice to the FSA when:

    1. (a)

      an alteration to the unit trust scheme is proposed; or

    2. (b)

      it is proposed that the trustee should retire and be replaced.

  2. (2)

    Any proposal that involves a change in the trust deed must be accompanied by a solicitor's certificate stating that the change will not affect the compliance of the deed with the rules.

  3. (3)

    The trustee must give written notice to the FSA of a proposal to replace the manager.

  4. (4)

    The FSA has one month following receipt of notice to consider whether or not to refuse the proposal.

Powers of intervention (sections 257 and 281)

COLLG 3.1.6G

The FSA has powers of intervention if there is a breach of the Act or COLL, or if it is in the interests of Unitholders or potential Unitholders in a scheme. In respect of an AUT, directions can be made for the manager to suspend the issue and redemption of units or to wind up the scheme.

Scheme particulars (section 248)

COLLG 3.1.7G

The Act empowers the FSA to require a manager to publish scheme particulars. COLL 4 (Investor relations) which refers to the scheme particulars as a prospectus, sets out details of the required contents, the timing of publication, and how and when the prospectus must be offered to prospective investors.

Recognition of overseas schemes

COLLG 3.1.8G
  1. (1)

    Recognition by the FSA enables overseas schemes to be marketed to the public in the United Kingdom.

  2. (2)

    [deleted]

  3. (3)

    [deleted]

  4. (4)

    [deleted]

  5. (5)

    [deleted]

Recognition of schemes constituted in other EEA states (section 264)

COLLG 3.1.8AG
  1. (1)

    Section 264 covers schemes constituted in another EEA State that are certified by their Home State regulator as meeting the requirements of the UCITS Directive. The scheme becomes recognised unless the FSA, within two months of receiving written notice of the intention to market into the United Kingdom, notifies the applicant and its Home State regulator that the manner in which the invitation is to be made (to the public) does not comply with UK law. Such schemes cannot be marketed to the public in the United Kingdom before the two month period is over.

  2. (2)

    If there is a change in the information supplied to the FSA in accordance with COLL 9.2 following initial recognition, the FSA wishes to be notified of such changes and revised documents (certified as true copies) should be sent.

Recognition of schemes authorised in designated territories (section 270)

COLLG 3.1.8BG
  1. (1)

    Section 270 covers schemes that are managed in and authorised under the law of a country or territory outside the United Kingdom that has been designated for this purpose by an order made by the Treasury ("the Designation Order"). These are currently Jersey, Guernsey, the Isle of Man and Bermuda. It should be noted that the Treasury:

    1. (a)

      retains responsibility for the designation of countries or territories and must be satisfied that their laws and practices relating to the authorisation and regulation of their collective investment schemes provide a level of protection at least equivalent to that provided under the Act;

    2. (b)

      must be content that adequate arrangements exist for co-operation between regulators in each country or territory and the FSA; and

    3. (c)

      may request the FSA to provide a report on the regimes of regulation in existing or prospective designated territories.

  2. (2)

    Notification forms are available, free of charge, at the FSA website and COLL 9.3 (Section 270 and 272 recognised schemes) provides further information on the documents to be supplied to the FSA. The scheme becomes recognised on the FSA's written approval, or automatically after two months from notification.

Recognition of individual overseas schemes (section 272)

COLLG 3.1.8CG
  1. (1)

    Section 272 covers overseas schemes that are not recognised by virtue of section 264 or section 270. The FSA may make an order declaring the scheme to be recognised if it is satisfied that the scheme will afford adequate protection (i.e. a similar level of protection to that provided under the Act) for investors, and the arrangements for the scheme's constitution and management, and the powers and duties of the operator and of any trustee or depositary, are also "adequate". In deciding what is adequate, the FSA will consider the rules applicable to AUTs or ICVCs.

  2. (2)

    A section 272 application requires detailed and rigorous analysis of all aspects of the scheme and the level of investor protection provided by the regime under which the scheme operates, so the FSA has 6 months in which to determine a completed application. Details of the information and documents required for a section 272 application can be found in COLL 9.3 (Section 270 and 272 recognised schemes).

Subsequent notification in respect of schemes recognised under sections 270 and 272 of the Act

COLLG 3.1.9G
  1. (1)

    The FSA wishes to be informed of changes in the information supplied by the operator of a section 270 or section 272 scheme under COLL 9.3.1 D

  2. (2)

    Any revised documents sent under (1) should be certified as true copies of the originals and accompanied, where relevant, by written evidence of the approval of the overseas regulator to the change.

Refusal of approval: schemes recognised under sections 270 and 272 of the Act

COLLG 3.1.10G

The FSA's power to refuse recognition and the procedures for this are set out in section 271 of the Act for schemes recognised under section 270, and section 276 of the Act for schemes recognised under section 272.

Revocation of recognition of overseas schemes (section 279)

COLLG 3.1.11G
  1. (1)

    If the operator of a scheme recognised under section 264 gives written notice to the FSA under section 264(6) that it desires the scheme to no longer be recognised, then the scheme ceases to be recognised.

  2. (2)

    Under section 279, the FSA may direct that a scheme shall cease to be recognised under section 270, or revoke its recognition under section 272, on similar grounds to those provided for in the revocation of authorised funds under section 254.

  3. (3)

    If the FSA proposes to give a direction under section 279 or to revoke a scheme's recognition, it will give a warning notice. Should the FSA decide to give a direction or revoke recognition, it will issue a decision notice. Thereafter, the matter may be referred to the Tribunal.

Scheme facilities in the United Kingdom (section 283)

COLLG 3.1.12G

This section enables the FSA to make rules requiring recognised schemes to maintain scheme facilities in the United Kingdom and to provide certain information to be supplied on request. Details are contained in COLL 9.4 (Facilities in the United Kingdom).