Access to Financial Services Markets Overseas Funds Regime
The UK investment management industry manages the savings and pensions of millions of UK citizens. They raise capital from investors into collective investment schemes (also commonly referred to as ‘investment funds’ or simply ‘funds’) and allocate it across the wider global economy. 75% of UK households use an asset manager’s services either directly or indirectly, for example through workplace pensions.
	Asset management is a highly internationalised industry and it is common practice for asset managers based in one country to establish or ‘domicile’ their collective investment schemes in another country and sell these schemes to investors around the world.
	Many of the schemes which are currently marketed to UK investors, including retail investors, and for which UK firms provide portfolio management services, are established in the EEA. The term ‘retail investors’ refers to ordinary people when they invest their personal savings and pensions, rather than professional, experienced investors or financial companies. Many of the schemes established in the EEA that are marketed to retail investors are classified as ‘UCITS.’ In the UK, ‘Undertakings for Collective Investment in Transferable Securities’ (UCITS) are schemes that have been authorised by the FCA as such. In the EEA, UCITS are schemes that are authorised by their national competent authority under Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (the UCITS Directive). The UCITS Directive also created the ‘passporting’ regime for UCITS, allowing them to be marketed to retail investors across the EEA.
	As of 2019, there were around 2,600 UK-domiciled UCITS authorised by the FCA which can market to retail investors. By comparison, in 2019 the FCA had received passporting notifications for around 9,000 UCITS that are domiciled in the EEA, which enables them to market to UK investors.
	Data from the Investment Association, the trade body for the UK asset management industry, indicates that around a quarter of their members do not operate any UK domiciled schemes, and instead exclusively market EEA-domiciled schemes, most of which are EEA UCITS, to UK investors through the passporting regime.