International Funds Focus Quarterly | January 2025
Published on 20th Jan 2025
Regulatory developments for fund managers in the UK and across Europe
Welcome to this year's first edition of our quarterly International Funds Focus!
One of the highlights of the last quarter of 2024 was a Court of Appeal judgment that emphasised the need for authorised hosts in the UK to review their contractual arrangements with appointed representatives – and to make sure there is an absolutely clear demarcation of what part of a representative's business they have taken responsibility for.
A broader funds development was the anticipated introduction of a new UK retail disclosure regime. The framework will be known as "the Consumer Composite Investments Regulations" replacing the current EU-based regulatory framework – and both Parliament and the Financial Conduct Authority (FCA) have been busy working on its progress.
In Europe, preparation is underway for the changes to the Alternative Investment Fund Managers Directive, known as AIFMD II. We provide analysis of what impact this will have on loan funds, as this development is relevant for fund managers who use an EU host alternative investment fund manager (AIFM) or hold an EU AIFM authorisation.
With a batch of expected policy papers delayed last year, 2025 is set to be a busy year for the financial services sector. Please reach out us if you would like an overview of what to expect.
Osborne Clarke's investment management, fund formation and regulatory experts are well placed to advise you further on any of the rapidly changing developments covered in this edition of our International Funds Focus.
For further information please contact the experts mentioned in the articles or one of our funds partners: Helen Parsonage, Alison Riddle, Tim Simmonds and Simon Thomas.
A new UK retail disclosure regime
The UK government, having exercised its powers under the Financial Services and Markets Act 2023, laid the groundwork for a new future UK retail disclosure regime on 21 November 2024. This revokes the retained EU law relating to retail disclosures and sets out the legislative basis for the new UK retail disclosure framework.
The framework will replace the Packaged Retail Investment and Insurance Products Regulation, known as 'PRIIPS', and the FCA has swiftly followed up with a three-star consultation on how to introduce significant changes to the rules for the way product information is presented.
Appointed representative updates
Many fund structures operate under a "regulatory host", known as a principal, which is often pivotal in enabling new fund launches. However, a recent split decision in the Court of Appeal judgment in KVB Consultants Limited v Jacob Hopkins Mckenzie Ltd has confirmed statutory liability for representatives even when a principal does not have regulatory authorisation for undertaking an activity.
The implications of the judgment are significant and we provide a reminder as to why, despite increased scrutiny from the FCA, regulatory hosts play a vital role in the UK funds ecosystem.
Read more about KVB Consultants Limited v Jacob Hopkins Mckenzie Ltd
Read more about the role of regulatory hosts
A new European harmonised regime for debt funds
AIFMD II provides significant updates to the European Union's framework for alternative investment funds, including addressing the current regulatory patchwork that debt funds are subject to across the Union.
These rules have been cast in the form of a directive, meaning each EU Member State must transpose them into national legislation within 24 months from the 15 April 2024. The devil is often in the detail and AIFMD II is no exception; therefore, how the directive is implemented is crucial.
The current German legislator has been quick to publish its draft transposition shedding light on what these crucial details might look like. We have analysed this draft and explain what it means for debt funds, appreciating, however, that the new German government to be elected in February might take a slightly different approach.
