AIC warns Treasury passporting is not a dealbreaker

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The Association of Investment Companies has warned it does not want the government to pursue passporting if it means ending access on a country-by-country basis, as it launches its official position on Brexit negotiations.

In a submission to the Treasury this week, the industry body has also said it wants create a tailored UK regime and shed “unhelpful” European Union regulation for products that are not actively marketed to European investors.

Around 95 per cent of investment company investors are from the UK, says AIC chief executive Ian Sayers.

“We are cautious about seeking a full passport for EU-wide access ‘at all costs’,” Sayers says.

Unlike Ucits funds, investment companies currently do not have access to the full EU passport and instead access investors there on a country-by-country basis, also known as the national private placement regime (NPPR).

The NPPR allows alternative investment fund managers to market products that cannot otherwise do so under the AIFMD domestic marketing or passporting regimes.

“The rules allowing investment companies to market into individual EU countries work well and can be used to target additional demand effectively,” Sayers says.

“It is unlikely that the additional compliance costs that come with a full passport would outweigh the benefits of any extra marginal demand.

“It would maximise the UK’s ability to reduce costs, enhance competition and support investment in the UK economy.

“Where funds actively seek EU investors, EU rules would be overlaid.”