Private fund managers: Horizon scanning manager level issues for 2021

The final session of the Macfarlanes annual investment management conference focused on manager-level considerations for private fund managers (GPs). It considered the future UK regulatory framework post-Brexit, ESG, retailisation, HMRC’s attention on GPs and cross-border immigration in the context of Brexit and Covid-19.

Discussing these issues were partners Christopher Good, Andrew Henderson and Gideon Sanitt and senior counsel James Perrott.

Future regulatory framework

The government is consulting on the post-Brexit regulatory framework for the UK. It is expected that there will be a much greater rule-making role for the FCA, and there are already indications that the FCA will look to take a proportionate approach in this area. Longer term, this should be positive for UK GPs, as the FCA (which is widely recognised as having a good understanding of private fund managers and the level of systemic risk posed by GPs compared to some of its European peer regulators) should be able to create a more tailored and proportionate regulatory environment, which is more appropriate for the nature, scale and complexity of many GPs.

ESG requirements

The delay in finalising the EU regulatory technical standards that accompany the EU Disclosure Regulation, and the lack to date of any equivalent UK-specific guidelines from the FCA, has left those GPs caught by the EU disclosure regulation wondering how best to comply with their obligations. The nature and extent of any future UK version of the EU disclosure regulation is as yet unclear, but the direction of travel on ESG is clearly towards an increased integration of ESG considerations into GPs’ businesses (and with far greater disclosure), with responsibility for this falling on senior managers. Investor pressure in this area is likely to mean that even for non-EU managers, the EU rules will become part of the landscape and part of the conversation with EU institutional investors.

Visit our “ESG: a roadmap of incoming EU regulations impacting asset managers” and ESG hubpage for more information.


The theme of “retailisation” – allowing retail investors greater access to private market strategies – continues to resonate. For GPs, predominantly used to dealing with institutional investors, the attractiveness of tapping new pools of investor capital must be weighed against the additional regulatory obligations that will come with accepting retail investment. This will be an area of focus for regulators, who are weighing up the benefits of providing greater access against the risks of allowing retail investors to engage with private fund GPs. The recent French fund launch by the BPI state bank, and the Investment Association’s consultation in the UK on long term asset funds, does demonstrate though a willingness to engage with the technical issues and push forward to create products that genuinely afford retail investors access to the private market and illiquid real assets.

HMRC attention on GPs

When it comes to the asset management industry, HMRC has for some time been focused on remuneration (and specifically expanding the receipts that can be taxed as individuals’ income), as well as on whether offshore income streams should be brought within the UK tax net.

We expect both of these trends to continue; it would not be surprising for the UK to become more assertive in a post-Brexit environment in suggesting that offshore sums should be taxable in the UK. Separately, GPs can expect more rules targeting behavioural change, i.e. rules designed by HMRC that require firms to police their own tax behaviour. For example, new rules to come into force on uncertain tax positions will require firms to assess whether HMRC would consider their tax positions to be uncertain, and make disclosures if this is the case. Many firms will find these kinds of rules challenging, as they will require firms to design policies which not only they believe, objectively, to be appropriate, but which they believe HMRC would consider to be appropriate.

Cross-border immigration

Covid travel restrictions – including mandatory self-isolation requirements – are posing challenges to many firms reliant on international business travel. There are exemptions from some of the requirements which firms and their personnel may be able to take advantage of, as well as a small number of “travel corridors” to certain countries, but in the main firms and their personnel should check the latest advice before making travel arrangements.

Firms are also facing up to the challenges of new immigration arrangements post-31 December, as the Brexit transition period expires. Rules in both the EU and UK will take effect which impose limits on the amount of time British nationals can spend in the Schengen area and, similarly, that EEA nationals can spend in the UK. There will also be restrictions on British nationals working in the EEA, and on EEA nationals working in the UK, without first obtaining relevant work permits. Visitors will still be able to undertake certain business activities, such as attending meetings and conferences, and negotiating and signing contracts.

Firms will need to obtain a sponsor licence from the Home Office if they intend to employ EEA nationals post-31 December, although this requirement will not apply with respect to EEA nationals who have already obtained pre-settled status under the EU settlement scheme.

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To view summaries of other sessions in the investment management conference series, follow the links below: