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COLLG 3A.1 Introduction

COLLG 3A.1.1 G

Part 17 of the Act deals specifically with collective investment schemes. The main features and practical effects of Part 17, and how the FCA exercises its responsibilities, are described below. References to sections are to the numbered sections of Part 17.

Promotion of schemes in the United Kingdom (section 238)

COLLG 3A.1.2 G
  1. (1)

    Before a scheme can be promoted to the public in the United Kingdom, it must be authorised or recognised by the FCA as a regulated collective investment scheme (see COLLG 1A.1.3 G).

  2. (2)

    A regulated collective investment scheme may be promoted to the public by an authorised person.

Application for authorisation as an authorised unit trust (sections 242 and 243)

COLLG 3A.1.3 G
  1. (1)

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

    1. (a)

      authorised persons under the Act with the appropriate Part 4A permissions; and

    2. (b)

      independent of each other (see COLL 6.9.2 G (Independence of depositaries and scheme operators) which provides guidance on independence).

  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 https://www.handbook.fca.org.uk/form.

  4. (4)

    A fee is payable and must be submitted with the application (see FEES 3 Annex 2 R (Application and notification fees payable in relation to collective investment schemes)).

  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 (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 an application relating to the authorisation of a UCITS scheme, a copy of the key investor information document; 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 (Independence, names and UCITS business restrictions) provides guidance on what the FCA considers undesirable or misleading names.

Determining and refusing applications (sections 244 and 245)

COLLG 3A.1.4 G
  1. (1)

    Under section 244 (Determination of applications), the FCA has:

    1. (a)

      up to 2 months in the case of a proposed UCITS; or

    2. (b)

      up to 6 months in the case of any other proposed scheme;

    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 FCA aims to process 75% of completed applications relating to a UCITS scheme within 6 weeks. If the FCA is satisfied with the application, an authorisation order is issued for the scheme.

  2. (2)

    If the FCA 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 3A.1.5 G
  1. (1)

    The FCA can revoke an authorisation order 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 FCA; 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 authorised unit trust scheme should continue.

  2. (2)

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

    1. (a)

      any matter should be investigated prior to revocation; or

    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 FCA 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 (sections 251 and 252A)

COLLG 3A.1.6 G
  1. (1)

    The manager must give written notice to the FCA when:

    1. (a)

      an alteration to the authorised 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 trust deed with the rules.

  3. (3)

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

  4. (4)

    The FCA has one month following receipt of notice under section 251 (Alteration of schemes and changes or manager or trustee) to consider whether or not to refuse the proposal. In the case of a notice under section 252A (Proposal to convert a non-feeder UCITS) the period available to the FCA is 15 working days.

Powers of intervention (sections 257 and 281)

COLLG 3A.1.7 G

The FCA 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 3A.1.8 G

The Act empowers the FCA 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 3A.1.9 G

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

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

COLLG 3A.1.10 G
  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 (EEA UCITS schemes). The scheme becomes recognised as soon as its Home State regulator has transmitted to the FCA the notification of the schemeoperator's intention to access the market in the United Kingdom, together with the documents prescribed in Article 93 of the Directive that the schemeoperator has filed with its Home State regulator.

  2. (2)

    If there is a change in the information supplied to the FCA in accordance with COLL 9.2 (Section 264 recognised schemes) following initial recognition, the FCA should be notified by the operator before the change is implemented.

Recognition of schemes authorised in designated territories (section 270)

COLLG 3A.1.11 G
  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 HM Treasury ("the Designation Order"). These include Jersey, Guernsey and the Isle of Man. It should be noted that HM 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 FCA; and

    3. (c)

      may request the FCA 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 FCA website and COLL 9.3 (Section 270 and 272 recognised schemes) provides further information on the documents to be supplied to the FCA. The scheme becomes recognised on the FCA's written approval, or automatically after two months from notification.

Recognition of individual overseas schemes (section 272)

COLLG 3A.1.12 G
  1. (1)

    Section 272 covers overseas schemes that are not recognised by virtue of section 264 or section 270. The FCA 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 FCA 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 FCA 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 section 272 of the Act

COLLG 3A.1.13 G
  1. (1)

    The FCA wishes to be informed of changes in the information supplied by the operator of a section 272 scheme under COLL 9.3.1 D (Information and documents to be supplied for a section 270 notification or section 272 application).

  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 3A.1.14 G

The FCA's power to refuse recognition and the procedures for this are set out in section 271 (Procedure) for schemes recognised under section 270, and section 276 (Procedure when refusing an application) for schemes recognised under section 272.

Revocation of recognition of overseas schemes

COLLG 3A.1.15 G
  1. (1)

    If the operator of a scheme recognised under section 264 gives written notice to the FCA 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 (Revocation of recognition), the FCA 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 (Revocation of authorisation order otherwise than by consent).

  3. (3)

    If the FCA proposes to give a direction under section 279 or to revoke a scheme's recognition, it will give a warning notice. Should the FCA 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 3A.1.16 G

This section enables the FCA 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).