COLLG 3.1 Introduction

Part XVII of the Act deals specifically withCISs. 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.

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 marketauthorised or recognised schemes to the public.

1. (1)

   Applications for authorisation of aUK unit trust, needto be made by the manager and trustee, who need to:

   1. (a)

      be persons authorised under the Act with a Part IV permission to act as manager and trustee respectively;

   2. (b)

      submit a joint application giving details of themselves and the scheme;

   3. (c)

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

   4. (d)

      provide a copy of the trust deed;

   5. (e)

      a business plan;

   6. (f)

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

   7. (g)

      submit a copy of the prospectus and simplified prospectus.

2. (2)

   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 misleading names.

3. (3)

   Application forms are available free of charge from the forms page. An application fee is payable (see COLL 10 (fees)).

4. (4)

   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 aim to process a completed application relating to a UCITS scheme within 6 weeks. If the FSA is satisfied with the application, an authorisation order is issued for the scheme.

5. (5)

   If the FSA propose 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 re-use the application, a decision notice will be sent and the applicant may refer the matter to the Tribunal.

1. (1)

   The FSA can revoke an authorisation order declaring a unit trust 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 continues;

2. (2)

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

   1. (a)

      that any matter should be investigated prior to revocation;

   2. (b)

      that revocation would not be in the interests of investors; or

   3. (c)

      that 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 notices and decision notices, will apply.

1. (1)

   The manager must give written notice to the FSA when:

   1. (a)

      an alteration to the unit trust is proposed; and

   2. (b)

      it is proposed the trustee retires.

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.

The FSA has powers of intervention if there is a breach of the Act or COLL, or if it is in the interestof 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 wind up the scheme.

The Act empowers the FSA to require a manager to publish scheme particulars. Details relating to the timing of publication, how and when they must be offered to prospective investors, and their content is contained in COLL 4 (Investor relations) which refers to the scheme particulars as a prospectus.

1. (1)

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

2. (2)

   Section 264 covers schemes constituted in another EEA State that are certified by their Home State as meeting the requirements of the UCITS Directive. The scheme becomes recognised unless, within two months of receiving written notice of the intention to market into the United Kingdom, the FSA 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. (Information and documents to be supplied with a section 264 notification) provides specific details.

3. (3)

   If there is a change in the information supplied to the FSA in accordance with COLL 9.2.1 G following initial recognition, the FSA wishes to be notified of such changes and revised documents (certified as true copies) should be sent.

4. (4)

   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. 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. 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.

5. (5)

   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). Section 272 applications require 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 complete 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).

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.

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.

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 schemeshall 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 theFSA 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.

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).