Financial Services and Markets Appendices to the Minutes of Evidence


Note by the Association of Unit Trusts and Investment Funds


  We are pleased that the Treasury has now published the missing parts of the draft Bill, including those relating to collective investment schemes and has passed them to the Joint Scrutiny Committee to enable them to take a view of the whole Bill. It is clearly going to be difficult for the Joint Committee to look properly at the draft provisions in the time available. Our initial consideration suggests that the Treasury have made few changes to the existing regime for unit trusts. Areas where problems have arisen in the past, for example, over the definition of a collective investment scheme remain unchanged. There are, however, some welcome examples of a more flexible approach: there will be more room to innovate because FSA is to be given powers to recognise more categories of fund; FSA is given a rule waiver power which it does not have at present. The draft provisions on oeics, including powers to enable the formation of both authorised and unauthorised versions, appear to offer some scope for developing more flexible fund structures which more closely match the changing demands of investors. We look forward to seeing the regulations which will build on the main provisions in the Bill.

  There are, however, a number of areas where we are not entirely sure of the Treasury's intention, or where we believe some additional flexibility would be desirable and hope to have the opportunity to discuss these points further with the Treasury and FSA. Similarly, we believe there may be areas where some adjustment may be needed to bring the provisions in line with other parts of the Bill.

  We clearly cannot expect the Joint Committee to look in any detail at what is being proposed, although we would be pleased to provide a more detailed briefing if this would be useful. It would, however, be helpful if the Committee could mention in its report that the time constraints were such that it, and the industry, were not able fully to consider the implications of the proposals for collective investment schemes. We are particularly concerned that there should be an opportunity, if necessary, during the Standing Committee stages of consideration of the Bill, to discuss any issues which may arise in relation to these particular clauses.

26 April 1999

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