FCA proposes changes to facilitate investment in patient capital

These proposals follow the 2018 Budget when the Chancellor announced a package of measures designed to increase investment in patient capital, a term for a broad range of alternative investment assets intended to deliver long-term returns; for example, infrastructure, real estate, private equity/debt, and venture capital.

The proposed changes in the consultation paper[1] are intended to enable retail investors to invest in a broader range of long-term assets through unit-linked funds, while continuing to maintain an appropriate level of protection.The proposed measures aim to address potential barriers to investment by retail investors in patient capital, and will be beneficial to consumers by allowing funds to choose investment opportunities that match the needs of consumers more effectively.

Alongside this, a discussion paper[2] explores how UK authorised funds can be used to invest in patient capital. It sets out the relevant authorised funds rules, and outlines the existing opportunities to invest in patient capital. It invites feedback to help identify the barriers to investment in patient capital through authorised funds and how such barriers can be overcome. The DP does not propose any changes to the authorised fund rules. Instead, the FCA will consider responses and consult more widely with industry stakeholders to come to an informed view on whether any rule changes are necessary.

Christopher Woolard, Executive Director of Strategy and Competition at the FCA, commented: 'We are proposing changes to allow retail investors greater access to long-term investment opportunities. We are also seeking views to help us identify any unnecessary barriers to investment in patient capital through authorised funds. We will ensure that any changes continue to provide an appropriate level of protection for consumers.'

Responses to the Consultation Paper[1] and Discussion Paper[2] can be submitted until 28 February 2019.

Notes to editors

1. Background: In 2016, Her Majesty’s Treasury and the Department for Business, Energy and Industrial Strategy launched the Patient Capital Review[3] (PCR). The PCR investigated whether the UK market for ‘patient’, or long-term, capital is working well – successfully bringing together those looking for long-term investment opportunities with those needing long-term financing. It found that investment in patient capital assets is below its potential.
2. Today’s Consultation[3] and Discussion Paper[4] form part of the FCA’s response to the PCR.