The FSA has outlined further progress to allow UK retail investors to access funds of hedge funds and other alternative investments.
The regulator has also begun a second round of consultation on a number of issues raised by fund managers and other relevant parties.
The latest Consultation Paper has confirmed the policy of introducing retail-oriented Funds of Alternative Investment Funds (FAIFs) to the FSA’s regulatory regime.
Commenting on the benefits of the proposals, Dan Waters, director of retail policy and themes at the FSA, says: “Permitting consumers access to a wider range of innovative investment strategies through authorised onshore vehicles will allow more choice and a better opportunity for risk diversification, while maintaining consumer protection through our proportionate rules on the operation of the product.”
He says the FSA is aiming to make final adjustments to the new regime by the end of the year.
Tax issues relating to onshore FAIFs were a difficult point to resolve, according to the FSA, but it says constructive discussions with the Treasury, along with their new tax framework published today, have helped resolve many potential problems.
The FSA also revealed it wished to include a ‘genuine diversity of ownership’ condition in its rules as a way of preventing the FAIF regime being used to gain unintended tax advantages.
The latest round of consultation will close on 22 May, with a policy statement and draft rules expected to be published near the end of 2008.
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