The doubling up of regulation could deter overseas funds from bringing their products to UK investors, FE Fundinfo has cautioned.
Helen Slater, regulatory manager at FE Fundinfo, said the UK is currently working to rewrite regulations which previously came under the EU.
Part of this is the consumer composite investments framework, which the FCA is currently consulting on until March 20.
This will replace the current rules under the Packaged Retail and Insurance-based Investment Products (PRIIPS) and Undertakings for Collective Investment in Transferable Securities (UCITS).
Slater said: “A lot of these are doubling up the regulatory burden because you’re going to have to do these things for the EU and the UK.
“There are significant challenges going forward.”
She said it is possible this could deter some companies from marketing their products in the UK.
Slater said this could be the case if there are differences between the EU’s Sustainable Finance Disclosures Regulations, which are expected to be published at the end of 2025, and the UK’s new Sustainability Disclosure Requirements, introduced by the FCA at the end of 2024.
Slater added: “SDR and SFRD is going to be a big issue if they apply SDR to EU funds and it looks completely different. Are you going to then be interested in marketing to the UK? Arguably not.”
Matthias Breier, head of ESG product at FE Fundinfo, agreed that it could “arguably be a deterrent”.
He said there could also be issues if the two regulations have noticeably different criteria.
He said: “One of the key challenges will be with the naming elements. We could suddenly start seeing a fund called sustainable in the UK and not in the EU, or vice-versa.”
To address this, Breier thinks wrappers could be a solution in the future.
He added: “Overall it will definitely be a setback for small asset managers. They will clearly need to define which strategies they want to bring into different countries.”
Slater agreed the changes are going to be more difficult for smaller players.
“There is going to be a lot of strategic conversations among our clients going forward,” she added.
tara.o’connor@ft.com
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