The HM Treasury will be in consultation until 9 June, Monday, and aims to create a a more regulated regime only for firms with more than 5 billion GBPs of assets under management
The British Government aims to implement an eased regulations for smaller private equity and hedge funds for keeping the country’s attractiveness as an investment hub.
On 7 April, Monday, HM Treasury opened a public consultation following the commitment of the Chancellor of the Exchequer Rachel Reeve to reduce by a quarter the administrative costs of regulation for companies taken last month (press release). The Government said that the consultation will focus on changes to the rules governing alternative investment fund managers with the aim of removing unnecessary barriers to investment, making the rules less onerous for managers and saving them millions in time, money and resources, leaving them free to support the UK’s most attractive businesses to grow and create jobs.
Emma Reynolds
The Financial Conduct Authority and HM Treasury are going to hold a 9-weeks consultation for updating regulatory obsolete thresholds and providing hedge funds, private equity firms and investment funds with the opportunity to contribute to the development of a leaner regulatory environment. Companies that achieved 100 million in equity have to abide to new regulatory burdens. Such normative frame may discourage some firms from growing and financing further investments across the country. This unintended limitation means that smaller asset managers must immediately be subject to the same rules as larger companies and face high costs once they reach this threshold. The consultation aims to create a more gradual regime, in which only the firms with aum of over 5 billion must full respect the requirements, while most operators must follow much less rigid rules with less administrative burdens. Once ended the consultation, the feedback from the asset management industry will be the ground for drafting laws.
Emma Reynolds, HM Treasury economic secretary, said: “We want to give security to workers, pushing further and faster for growth through our Plan for Change. That means making Britain the number one place to do business and breaking down unnecessary barriers to investment, such as costly regulation that prevents asset managers from growing and providing capital for businesses across the country to grow.”
Simon Walls, FCA interim markets executive director, pointed out: ” For UK investment managers we want more suitable rules that could enable them to operate more efficiently, further supporting competition, competitiveness and economic growth. This is part of our wider work to simplify the regulatory regime for asset managers, to support the continued competitiveness of our world-leading financial services, as outlined in our new strategy.”
Michael Moore, British Venture Capital Association coo, stressed out: “We welcome the Government’s consultation on developing a simpler and more competitive system for alternative investment fund managers (AIFMs). A more effective and less burdensome regulation will make the UK private capital industry more competitive globally and help it to attract domestic and international resources to invest in UK growth companies. This consultation is an important step in securing the UK’s status as one of the world’s leading centres of private capital. We look forward to debating the principles and details of the changes, but this provides an opportunity to really boost the Government’s growth mission by developing the UK’s private capital fund ecosystem and increasing investment in UK SMEs.”
Gus Morison, the ceo and founder of AYU, a private club of the global community of alternative investment funds, family offices and institutional investors, said: “This will be a huge advantage for new management teams and will encourage many new entrants. The barriers to market entry are already high enough even without the problem of regulation, and having to go through additional hurdles is one of the biggest obstacles at the moment. Many are leaving London now, but this initiative might make them retrace their steps. Small managers are often much more agile and dynamic and can enter spaces that larger managers cannot reach. As such, they can often generate hidden alpha. Even in the case of smaller PE funds, the ripple effect will invigorate private market investments. This is good news for everyone. We need more of it’.
