Part 3: Access to Financial Services Markets Section 25: Individually recognised overseas collective investment schemes
This section makes amendments to FSMA. Sections (3) to (5) set out amendments to Chapter 5 of Part 17, which relate to the process for recognising overseas schemes under section 272 of FSMA.
	Section 272 will be available for individual overseas schemes that do not have the benefit of recognition under section 271A. This may be because a scheme is authorised in a country or territory that is not subject to an equivalence determination for retail investment schemes or is not a specific category of scheme that has been described in such an equivalence determination.
	The following amendments to section 272 are made:
amending section 272(1) of FSMA so that schemes that are capable of being recognised under section 271A of the OFR cannot be recognised under section 272 of FSMA. section 272(1A) has then been added to define a scheme having ‘the benefit of section 271A’ as a scheme that is authorised in a country or territory approved by, and falling within the descriptions set out in, regulations made under section 271A of FSMA;
section 272(5) of FSMA required the FCA to consider any rule of law and any matters which are or could be the subject of rules, in relation to UK authorised schemes, when assessing an application from an overseas scheme to be recognised under section 272. Section 272(5)(b) is amended so that the FCA will only need to consider what is currently the subject of rules, not what could be the subject of rules.
	The following amendments to section 277 are made:
amending section 277(1) of FSMA so that for FCA approval, scheme operators no longer have to provide written notice for all changes to the scheme’s operation or management. Instead, they only have to provide notice for changes which would be a material alteration. The FCA may make rules specifying when a proposed alteration is a material alteration;
amending section 277(3) of FSMA to remove the requirement for a scheme operator to provide written notice to the FCA at least one month prior to any replacement of the operator, trustee or depositary. Section 277(3A) has then been added so that, instead, the scheme operator has to tell the FCA at least one month before the replacement, or if that is not possible, it must tell the FCA as soon as possible in the period of one month before the replacement is made. Section 277(3B) has also been added so that the scheme operator must give written notice of any changes to the name or address of the scheme operator or representative of the operator in the UK, the name and address of any trustee or depository of the scheme, and the address of a place in the UK for the service of notices or other documents which need to be served under FSMA.
	The following amendments are made:
an addition of section 282A is made, which states the obligations on the operator if the scheme’s recognition is revoked or suspended. This states that, if the FCA gives a decision notice that a scheme is revoked, or a direction that the scheme is suspended, then the scheme operator must notify such persons as the FCA may direct. The form and manner of this notification may be decided by the FCA and must contain such information as the FCA directs;
an addition is made to create section 282B on public censure. This section states that if the FCA believes any rules and requirements set out in subsection (1)(a)-(c) have been contravened, then it may publish a statement to that effect. If the FCA proposes to publish such a statement, it must give the scheme operator a warning notice. If the FCA then decides to publish the statement, it must also give a decision notice, which will set out that the operator has the right to refer the matter to the Upper Tribunal;
an addition is made to create section 282C, which clarifies that recognition under section 272(1) applies to parts of collective investment schemes (also called ‘sub-funds’) as it does to schemes. Subsection (2) makes it clear that the definition of a ‘recognised scheme’ in Part 17 of FSMA includes a part of a scheme recognised under section 272, and that other references in or made under Part 17 to schemes recognised under section 272 include parts of schemes. Subsection (3) sets out that provisions made under or of Part 17 have effect in relation to parts of schemes recognised, or seeking recognition under section 272 with appropriate modifications, and subsection (4)(a) allows HM Treasury to make provision by way of regulations as to what are, or what are not such appropriate modifications. Subsections (4)(b) and (c) also give HM Treasury powers to make, by regulations, provision so that relevant enactments have effect with appropriate modifications, or do not have effect, in relation to parts of schemes recognised or seeking recognition under section 272. Relevant enactments are defined as any legislation relating to schemes recognised or seeking recognition under section 272, which were passed or made before the day on which section 282C(1) comes into force. In making regulations under, and for the purposes set out in subsections (4)(b) and (c), HM Treasury can amend, repeal or revoke legislation. Subsection (8) then inserts 282C in the list in section 429(2), so that HM Treasury’s power under 282C is exercisable by the affirmative procedure.