The FCA is consulting on new guidelines which might lengthen FSCS safety to retail buyers investing in Lengthy Time period Asset Funds (LTAFs).
The potential adjustments are a part of a transfer by the FCA to make LTAFs extra client pleasant – and to encourage retail buyers to have faith in investing in them.
The proposed guidelines would give retail buyers and extra outlined contribution pension schemes entry to Lengthy Time period Asset Funds (LTAF).
The LTAF car was launched in 2021 to encourage extra investments in long-term, illiquid belongings, corresponding to enterprise capital, non-public fairness and personal debt, actual property and infrastructure.
Thus far few corporations have provided them with Schroders among the many first to launch one earlier this yr.
The FCA says that LTAFs are a better threat product that may assist present higher diversification to funding portfolios in trade for probably greater returns however much less fast liquidity and longer redemption intervals.
Further protections underneath the FSCS ought to increase client confidence, the FCA says.
LTAFs will even be topic to further protections underneath the FCA’s excessive threat funding framework, together with threat warnings and buyer assessments.
The FCA says it’s in search of views on whether or not the protections of the Monetary Providers Compensation Scheme ought to be out there for LTAFS, or whether or not a unique strategy ought to be in place, earlier than LTAFs get to the retail market.
Sarah Pritchard, government director, markets, mentioned: “Longer-term much less liquid actual belongings can generate good various returns for buyers and, crucially, assist to develop the UK economic system by means of investments, corresponding to new infrastructure.
“Our new guidelines enable retail buyers, and pension funds, to spend money on productive finance, however in addition they recognise that long-term investments may be riskier. That’s the reason individuals will probably be given clear threat warnings and buyer assessments, in step with different greater threat merchandise.”
• PS23/7: Broadening retail and pensions entry to the long-term asset fund