In this paper, we are consulting on potential changes to our permitted links rules in our Conduct of Business (COBS) sourcebook. The purpose is to address any unjustified barriers these may present to investment by retail investors in a broader range of long-term assets in unit-linked funds, while continuing to offer an appropriate degree of investor protection.
Our consultation follows recommendations by the Law Commission in their June 2017 report on Pension Funds and Social Investment (see below) and engagement with HM Treasury’s Pension Scheme Investment Taskforce (see below) regarding potential regulatory barriers to investment in illiquid ‘patient capital’ assets. Patient capital refers to a broadly defined range of illiquid investments (including, for example, venture capital, infrastructure and corporate loans) intended to deliver long-term returns. These different elements of patient capital may have significantly different/higher risk profiles and this may in turn affect their suitability for retail investors.
We are also publishing a discussion paper at the same time in order to explore the impact on our regulatory regime on investment in patient capital through authorised funds.
We are seeking to remove some potential barriers to retail investors investing in a broader range of long-term assets in unit-linked funds. Our measures should:
You should read this if you have an interest in unit-linked funds that may wish to hold illiquid or higher risk assets. Our consultation may therefore be of interest to:
Others may have a less direct interest in the issues raised in this consultation but may also find the CP relevant. For example:
Please send us your comments by 28 February 2019. We are keen to have respondents’ views on whether:
You can also:
We will consider feedback to this consultation and publish a Policy Statement and, where relevant, make our final rules and guidance in 2019.