We are launching a discussion about some of the risks created when consumers use open-ended funds to gain exposure to assets that may be difficult for the fund manager to buy, sell or value quickly. In this paper we refer to these assets as ‘illiquid assets’: they may include land and buildings, infrastructure, and financial assets such as unlisted securities.
With this discussion paper, we aim to gather evidence to decide whether more (or different) rules and guidance are needed to support market stability and protect consumers, without preventing them from having access to a diversified range of investment opportunities.
We want stakeholders to tell us what problems they think exist where open-ended funds hold illiquid assets, how well the current rules address those problems and what further regulatory intervention might be needed. To stimulate debate, we give some examples of possible policy approaches that we could use to intervene.
Who this affects
You should read this if you have an interest in open-ended investment funds that are able to hold inherently illiquid assets. This includes:
- operators and investment managers of these funds
- ancillary service providers
- intermediaries, such as platform service providers
- pension plan operators (eg those offering SIPPs and SSaS)
- financial advisers
- life assurance companies with exposure to illiquid assets such as property, either by direct investment or through holdings in investment funds
- discretionary wealth managers
- other professional or institutional investors
Consumers who invest directly in funds with an exposure to illiquid assets, or who are exposed to these funds through their pension contributions or their long-term life assurance policies are affected by the issues we discuss in this paper. We welcome input from individual consumers and groups representing their interests.
The consultation period has now closed.
We will consider your feedback and publish a response later in 2017. If we decide to make proposals for new or amended rules, we will publish a consultation paper.