The U.K. Financial Conduct Authority on Dec. 12 proposed amendments to its Conduct of Business Sourcebook to boost retail investors' access to patient capital.
These investment assets deliver long-term returns but are illiquid in the short term. The changes will give retail investors more access to long-term investments through unit-linked funds, particularly in pension funds, while maintaining sufficient levels of protection for consumers. They intend to remove potential barriers that retail investors face when investing in patient capital. They will also allow funds to choose investment options that are better suited to the needs of consumers.
Authorized firms will be responsible for ensuring that higher risk and illiquid investments are only offered or taken up when suitable and appropriate for the consumers and their needs. The changes also intend to increase transparency of the risk that comes with investing in patient capital to boost confidence and participation of retail investors.
The FCA also opened a discussion paper to explore how U.K. authorized funds can be used to invest in patient capital.
The proposal follows the Patient Capital Review — launched by the Treasury and the Department for Business, Energy and Industrial Strategy in 2016 — which found that investment in patient capital assets in the U.K. is below its potential.