07 May 2021

The FCA have published FS21/8: Feedback to consultation paper (CP20/15) on liquidity mismatch in authorised open-ended property funds.  AREF and the IA jointly responded to CP20/15 in November 2020.

The FCA have set out their current position to the feedback they received to CP20/15 but they will not be providing a final decision to the policies they proposed, including notice periods, until Q3 2021 at the earliest. This is to give them an opportunity to review the feedback they receive to the consultation (CP21/12) they have just published on the proposed long-term asset fund (LTAF). Also, by then the Productive Finance Working Group (PFWG), jointly set up by the FCA, the Bank of England and HM Treasury, should have reported on its review of the operational challenges for the LTAF. Some of these challenges are similar to ones that would be encountered by authorised open-ended property funds with notice periods.

The FCA have made it clear that if they do proceed with applying mandatory notice periods for property funds, they will allow a suitable implementation period of 18 months to 2 years before the rules would come into force. This is to allow fund managers and the wider ecosystem, that supports and distributes investment funds (including platforms, wealth managers and unit link providers), to be able to operationally support and distribute funds with notice periods. The FCA have been liaising with HM Treasury and HMRC on their own consultation on investments in funds with notice periods continuing to be eligible assets for ISAs. The FCA will take the effect of ISA eligibility into account in their final decision.

AREF’s Retail Funds Committee and Public Policy Committee will be considering the FCA’s feedback. If you have any views on the feedback statement you would like to share with AREF please advise Jacqui Bungay, Policy Adviser, AREF (jbungay@aref.org.uk).


Please see below for the Association of Real Estate Funds quote on the FCA statement on its work on liquidity mismatch in authorised open-ended property funds which was published this morning: 


Commenting on the FCA statement on its work on liquidity mismatch in authorised open-ended property funds, Paul Richards, Managing Director of AREF, said:

"We welcome the considered response from the FCA and support its three main conclusions, including: aligning this work with that of the Long-Term Asset Fund (LTAF) as a solution to allow DC default funds access to illiquid assets including property, on the need to address operational difficulties in the surrounding investment ecosystem, and for a suitable transition period to implement any such changes. We support the development of the LTAF and we look forward to working with the FCA and the Investment Association on its creation." 



Jacqui Bungay

Jacqui Bungay

AREF Policy Secretariat , AREF

Jacqui provides policy guidance and secretariat services to the AREF Board and AREF Management Committee as well as the following AREF Committees: Corporate Governance, ESG & Impact Investing, Investor, Public Affairs, Research and Information and Retails Funds. In addition, Jacqui monitors members’ compliance with AREF’s Code of Practice. 

Jacqui joined AREF in 2014 after working for over 25 years in fund compliance, client relationships and administration at Natwest Trustee & Depositary Services.