Update on the Overseas Fund Regime: s21 Financial Promotions Gateway
The FCA recently implemented key changes to the way overseas funds will be marketed in the UK through the new Overseas Funds Regime (OFR). In particular, overseas fund operators wishing to issue financial promotions relating to overseas funds in the UK must now apply for recognition under a new gateway. To assist firms with this, the FCA recently updated its OFR webpage to include detailed ‘how to’ guides towards completing their applications.
From EU Passporting to FCA Approval
Historically, under the EU’s UCITS regime, EU-based funds could "passport" their services into the UK, issuing financial promotions freely across the region. This arrangement continued under the Temporary Marketing Permissions Regime (TMPR) post-Brexit, allowing firms to operate in the UK without requiring additional FCA approval. However, under the new OFR, this flexibility has now been removed, requiring overseas funds to seek recognition in the UK via the OFR gateway to market their products.
For financial promotions targeted at UK consumers, recognised overseas funds must now find an FCA authorised firm to approve these promotions. As such, firms that were previously operating under the TMPR now face the challenge of securing a UK partner to approve their financial promotions in the UK.
s21 Financial Promotions Gateway and Lack of Willing Approvers
Since February 2024, firms looking to approve third-party financial promotions need to first obtain specific permission via the s21 gateway, a new regulatory path whereby authorised persons may approval financial promotions for unauthorised persons. This has created somewhat of a bottleneck, as many UK firms remain hesitant to take on this approval responsibility, stemming from the perceived increased compliance burdens, associated regulatory risks and the high levels of scrutiny required to meet the FCA’s high standards, including a significant amount of data that must be provided at the gateway.
As such, overseas funds are struggling to find UK firms willing to approve their financial promotions, potentially hindering their ability to market to UK consumers.
October 2024: First Landing Slots for Applications
The FCA first application window, or landing slot, for standalone EEA UCITS funds inside of the TMPR to apply for recognition under the OFR opened on 1 October 2024. Further three-month landing slots will be issued to operators of umbrella UCITS schemes by alphabetical order of the fund operator’s name from November. If for example your fund operator name begins with A, you will be directed to make your application in landing slot 2 (1 November 2024-31 January 2025), whereas if your fund operator name begins with K you will be allocated landing slot 10 (1 September 2025-30 November 2025).
As part of their application, overseas funds will need to designate a UK-authorised firm that will approve their financial promotions. This creates a time-sensitive challenge, as overseas funds must establish these partnerships quickly to meet the upcoming deadlines.
How We Can Help
ComplyCraft can assist firms with overseas funds towards navigating these challenges. We can support you through the entire application process for recognition under the OFR and help identify UK firms that are willing and able to approve your financial promotions. Additionally, we can assist firms authorised to review these financial promotions to ensure they meet FCA standards, reducing the compliance burden for both overseas and UK-based firms.
For more information, please reach out to our team who would be happy to assist with the process if needed, or just provide clarity and support.