FS20/2: Patient Capital and Authorised Funds

Open discussion: DP18/10
Discussion closed
Feedback Statement (FS20/2)

This Feedback Statement summarises responses from DP18/10 on whether there are unnecessary barriers to investing in patient capital through authorised funds. We discuss the feedback as well as a proposal from the Investment Association for a new type of fund.

Read FS20/2 (PDF)

About patient capital

Patient capital investments refer to a broad range of investments intending to deliver long-term returns. Such assets include venture capital, private equity, private debt, real-estate and infrastructure. These assets are usually illiquid (meaning they can’t be sold quickly) and therefore require investors who are willing and able to commit capital for a significant period of time.

Why we are focusing on barriers to investing in patient capital

The Treasury’s Patient Capital Review looked at whether patient capital investments into innovative UK firms was working well and found that investment in this space was below its potential. Investment at start-up stage was healthy but becomes less so when looking to scale up. This was negatively impacting the UK economy.

Who this is relevant for

This Feedback Statement will be of interest to:

  • operators and investment managers of UK authorised funds and specialised funds (European long-term investment funds (ELTIFs), European social entrepreneurship funds (EuSEFs) and European Venture Capital Funds (EuVECAs)), and their depositaries
  • intermediaries, such as platform service providers, discretionary wealth managers and financial advisers
  • pension plan operators (eg those offering self-invested personal pensions)
  • life assurance companies with an interest in patient capital, either by direct investment or through holdings in investment funds
  • retail, professional and institutional investors
  • ancillary service providers 

Next steps

We have not found any significant barriers to investing into patient capital assets through funds available for professional investors. We have found some barriers to investing into patient capital within our authorised funds regime for broad retail distribution. However, we have not found barriers which are unnecessary and can be relaxed without introducing a degree of risk that is inappropriate for retail investors.

We also note that other investment products, such as investment trusts, provide alternative ways for retail investors to access long-term investments.

We will be considering any rule changes with regards to authorised funds holding illiquid assets that may be recommended upon completion of the Financial Policy Committee (FPC) work later this year.

Page updates

28/02/2020: Information added Feedback Statement (FS20/2) published and page updated