The UK’s Financial Services Authority (FSA) and Treasury have published a joint consultation paper setting out proposals for the implementation of the revised Undertakings for Collective Investment in Transferable Securities Directive (UCITS IV).

UCITS IV repeals the current UCITS Directive and must be implemented into national law by all European Union member (EU) states by 1 July 2011.

In July this year the European Commission completed a programme of improvements to the EU framework for UCITS funds, adopting a package of Directives and Regulations to provide more detailed rules.

UCITS IV introduces a range of changes, including; introduction of a management company passport, improved investor disclosure, removal of administrative barriers to the cross-border marketing of UCITS, and a framework for mergers between UCITS funds.

In addition, UCITS IV contains provisions for ‘master-feeder’ structures, and improved supervisory co-operation.

In announcing the release of the implementation proposals, Treasury and FSA said the Directive represents an ‘important modernisation’ of the regulatory framework and procedures for selling retail investment funds cross-border in Europe.

The consultation document says implementing UCITS IV will require changes to both UK legislation and the FSA’s handbook of rules and guidance.

“The ‘level 1’ and ‘level 2’ Directives must be transposed into UK law by July 2011; the ‘level 2’ Regulations apply directly in law, but any laws or regulations that would inhibit their effective application must be amended by the same date,” the paper says.

Treasury and the FSA are inviting submissions on their implementation proposals by March 21 next year. The full consultation document can be downloaded here.

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