COLLG 1A.1 Introduction

1. (1)

   This Collective Investment Scheme Information Guide (COLLG) contains some key facts on the regulation of regulated collective investment schemes in the United Kingdom. It will be of interest primarily to those who wish to gain a general understanding of the regulatory regime governing these schemes.

2. (2)

   This guide is intended to complement the rules and guidance in the Collective Investment Schemes sourcebook (COLL). It also explains how an authorised firm should go about applying for authorisation of a scheme under the Act or under the OEIC Regulations.

3. (3)

   This guide does not contain information on unregulated collective investment schemes. Such schemes cannot be marketed to the general public, are not subject to COLL and are otherwise restricted in their promotion.

4. (4)

   The material in this guide is intended only as a summary of a number of significant legal provisions affecting regulated collective investment schemes. It does not constitute guidance under sections 139A and 139B of the Act and does not have the status of the guidance in the Handbook. This also means that GEN 2.2 (Interpreting the FCA Handbook) does not apply. If you have any doubt about any legal provision you should seek appropriate legal advice.

5. (5)

   This guide italicises words that are defined in the Glossary that forms part of the FCA Handbook. For the full definition of the term, the reader should consult the Glossary and adopt the meaning specified for COLL.

6. (6)

   The guide is current as of November 2012. The guide does not remove the need for firms to keep up to date with regulatory developments and to consider the potential impact on business of proposed changes - for example, the regulatory framework of changes required by further European Union (EU) initiatives.

1. (1)

   There are three broad levels of regulation of collective investment schemes in the United Kingdom. These can be summarised as EU regulation, UK legislation and regulation by the FCA.

2. (2)

   EU collective investment scheme product regulation was introduced in 1985 by the Undertakings for Collective Investment in Transferable Securities Directive (UCITS Directive) and has been updated on several occasions by amendments to that Directive, with a revised version in 2009. If a scheme is established and authorised in the United Kingdom and complies with the provisions of the UCITS Directive, it is a UCITS scheme and is capable of being promoted throughout the EEA. However, not all regulated collective investment schemes are UCITS schemes (see COLLG 1A.1.3 G). COLLG 2A (European legislation) provides more detail on the scope and contents of the UCITS Directive.

3. (3)

   The main UK legislation is the Act (under which AUTs operate) and the Open-Ended Investment Company Regulations (OEIC Regulations) (under which ICVCs (also known as OEICs) operate). COLLG 3A (The FCA's responsibilities under the Act) provides details on the FCA's responsibilities under the Act; how a firm may go about applying for authorisation of a unit trust scheme or recognition of an overseas scheme; and what notifications are required to the FCA in terms of changes to those schemes. COLLG 4A (The FCA's responsibilities under the OEIC Regulations) provides details on the FCA's responsibilities under the OEIC Regulations; how a firm may go about applying for authorisation of an ICVC; and what notifications are required to the FCA in respect of changes to the ICVC.

4. (4)

   The main FCA requirements are set out in the FCA Handbook, in particular in COLL. COLL is a specialist sourcebook of the FCA Handbook and is structured in a way that gives rules and guidance on specific aspects of AUT and ICVC regulation and on recognised schemes. COLLG 5A (The COLL sourcebook) provides details of the structure of COLL.

1. (1)

   Regulated collective investment schemes are collective investment schemes which are regulated by the FCA as authorised funds or recognised by the FCA as recognised schemes:

   1. (a)

      authorised funds must take the form of an AUT (an authorised unit trust scheme) or an ICVC (an investment company with variable capital) (as described in more detail below), must be established in the United Kingdom and must be:

      1. (i)

         a UCITS scheme; or

      2. (ii)

         a qualified investor scheme; or

      3. (iii)

         a non-UCITS retail scheme; and

   2. (b)

      recognised schemes must be established outside the United Kingdom and recognised by the FCA under:

      1. (i)

         section 264 of the Act (Schemes constituted in other EEA States) - these are UCITS; or

      2. (ii)

         section 270 of the Act (Schemes authorised in designated countries or territories); or

      3. (iii)

         section 272 of the Act (Individually recognised overseas schemes).

2. (2)

   The promotion of regulated collective investment schemes is restricted by the Act. Under section 238 of the Act (Restrictions on promotion), regulated collective investment schemes may be promoted by authorised persons. UCITS schemes, non-UCITS retail schemes and recognised schemes may be promoted to retail investors. Qualified investor schemes may only be promoted to certain prescribed category of investor (see COLLG 5.1.3G(8)).

An AUT (or authorised unit trust scheme) is a unit trust scheme which is authorised by the FCA by making an authorisation order. Under section 237 of the Act (Other definitions), a unit trust scheme is a collective investment scheme under which the property is held on trust for the participants by the trustee. An AUT is constituted by a trust deed, entered into by the manager and trustee. Under section 243(4) of the Act (Authorisation orders) the manager and trustee must be independent of each other.

1. (1)

   An ICVC (or investment company with variable capital) is an open-ended investment company (or OEIC) as defined by section 236 of the Act (Open-ended investment companies) which is incorporated under the OEIC Regulations. Section 262 of the Act (Open-ended investment companies) empowers HM Treasury to make provisions relating to open-ended investment companies, which it has done by way of the OEIC Regulations, including provisions relating to the establishment of ICVCs. The FCA may authorise an ICVC by making an authorisation order under regulation 14 of the OEIC Regulations. Paragraph 1(3) of Schedule 5 to the Act states that an authorised open-ended investment company is an authorised person. So, an ICVC is an authorised person.

2. (2)

   An ICVC is constituted by an instrument of incorporation. Regulation 15(4) of the OEIC Regulations requires an ICVC to have at least one director. Where there is only one director, that director must be a body corporate with the permission of acting as the depositary or sole director of an open-ended investment company. COLL refers to this person as an authorised corporate director (ACD). A depositary must take responsibility for the safekeeping of the scheme property. The depositary must be independent of the ICVC and each of its directors.

3. (3)

   The directors and the depositary are required to comply with the OEIC Regulations and the rules in COLL and, in accordance with paragraph 6(1) of Schedule 2 to the OEIC Regulations, are also bound by the provisions of the instrument of incorporation.

1. (1)

   No person may carry on a regulated activity by way of business in the United Kingdom, or purport to do so, unless he is an authorised person (or an exempt person). This prohibition is referred to in the Act as the general prohibition. Guidance for persons considering carrying on regulated activities in the United Kingdom can be found in PERG. The FCA website page "Apply for authorisation": https://www.fca.org.uk/firms/authorisation/apply-authorisation gives guidance on how to apply to the FCA for a Part 4A permission. This authorisation is different to the authorisation of an AUT or an ICVC, as referred to in COLLG 1A.1.4 G and COLLG 1A.1.5 G respectively.

2. (2)

   The following constitute regulated activities:

   1. (a)

      establishing, operating or winding up a collective investment scheme;

   2. (b)

      acting as trustee of an authorised unit trust scheme; and

   3. (c)

      acting as the depositary or sole director of an open-ended investment company.

3. (3)

   The FCA maintains a public register of persons who have a permission to carry on a regulated activity. The register also contains details of all regulated collective investment schemes and it can be consulted on the FCA's website at www.fca.org.uk/firms/financial-services-register.