Charity Commission proposes transferring regulation of CIFs to the FCA

20 Jun 2013 News

The Charity Commission has launched a 12-week consultation on the regulation of common investment funds (CIFs), which includes a proposal to transfer responsibility for regulating CIFs to the Financial Conduct Authority (FCA). 

The Charity Commission has launched a 12-week consultation on the regulation of common investment funds (CIFs), which includes a proposal to transfer responsibility for regulating CIFs to the Financial Conduct Authority (FCA). 

The consultation has been launched because regulations governing fund managers of CIFs will need to change, as a result of a new European Union Directive, the Alternative Investment Fund Managers Directive.

Previously, because CIFs were unregulated funds, the Charity Commission included in the model scheme certain provisions restricting the investment powers and borrowing powers. However in light of the requirements imposed on fund managers by the Alternative Investment Fund Managers Directive, the FCA will now have some oversight of CIFs.

The consultations sets out the alterations that the Commission proposes to make, including changing the investment and borrowing powers of CIFs to be similar to those for regulated investment funds; and establishing CIFs as regulated investment funds under the FCA.

Jane Hobson, head of policy at the Charity Commission, said: "The Commission has an important role in making sure that charities are kept informed about the changes to regulations so that they know what is expected of them. This consultation helps to highlight the changes that are coming and, by listening to the sector, helps us get our model schemes right – both elements are important in making sure charities know what they have to do.

"We are welcoming contributions from charities, their advisers, experts in charity investments and those that benefit from or support charities.”

More details about the consultation can be found on the Commission’s website. The consultation will end on 11 September 2013.

A CIF is a collective investment fund in which only charities can participate. Charity law gives the Commission the power to establish these funds as charities. As a result, although the Commission does not regulate the performance of the investment funds, it does have responsibility for regulating these funds as charities.

 

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