FCA guards against repeat of gated property funds saga

Watching brief property 620

The FCA has raised concerns about the wave of property fund suspensions in the wake of the Brexit vote and whether fund groups could have been more transparent with investors.

Speaking to the Financial Times, FCA chief executive Andrew Bailey said the suspensions seen over the summer were “sensible” but said there were questions over the way discounts were applied.

Bailey said: “[This] is about saying if you’re an exiting investor, here are the terms. I understand the economics, and I understand why they do that, but it has to be done transparently and fairly, and those issues we want to ask questions about.”

The FCA plans to issue a discussion paper to get feedback on its concerns about open-ended property funds.

Bailey said: “They’re open-ended funds with illiquid assets and the fund commits to daily redemption, but you can’t necessarily value the assets daily. The suspension means to deal with that, but the question is – does it work as you want?”

He added: “The suspensions did their job, but you’ve got a few challenges in there.”