EU-registered funds held in ISAs and Child Trust Funds must sign up to the FCA’s Temporary Permissions Regime by 30 October or face disqualification from these vehicles post-Brexit.
Data and technology provider FE has warned that in the event of a ‘no deal’ Brexit on 31 October 2019, UCITS funds currently registered in a European Economic Area state will no longer qualify for ISA and CFT inclusion unless they are part of the TPR, leaving investors unable to invest further in these funds.
Mikkel Bates, regulatory manager, FE, said: “Obviously, we don’t know if or when a no-deal Brexit will take place, so it is understandably hard for fund managers to plan effectively for the post-Brexit landscape. That said, registering for the TPR now will afford additional time for managers of non-UK funds to ensure they remain compliant in the immediate aftermath of a UK withdrawal.
“In the event of a ‘no deal’ Brexit, the TPR is only the first regulatory step that UCITS funds will have to take, should they wish to be eligible for ISAs and CTFs. A subsequent – and more permanent – regulatory regime will be introduced at a later date, so for longer-term planning, signing-up to the TPR by 30 October will be essential.”
Bates said it remains unclear how many funds have signed up to the TPR to date. The initial deadline was 28 March 2019, in line with the original date for Brexit, so while the majority are likely to have signed up already, Bates said there could still be some who have adopted a ‘wait and see’ approach and will need to act now.
He added: “Evidently these regulations will only come into effect should the UK leave the EU without a deal on 31 October but it is advisable that UCITS funds that wish to continue being eligible for ISAs and CTFs should be as prepared as possible for a no-deal eventuality.”