Source · Select Committees · Treasury Committee
Recommendation 10
10
Paragraph: 80
We note the debate at the Productive Finance Working Group Steering Committee on retail access...
Recommendation
We note the debate at the Productive Finance Working Group Steering Committee on retail access to the ‘long term asset fund’ (LTAF). There should be clarity about who will have access to the LTAF. The Chancellor and the financial regulators should set out the timeframe for the launch of the announced ‘long term asset fund’ to allow pension savers to invest in long-term projects. We would expect that such an LTAF would be focused on providing a net-zero compliant product.
Paragraph Reference:
80
Government Response
Acknowledged
HM Government
Acknowledged
Since the publication of the Net Zero and the Future of Green Finance report, the Financial Conduct Authority (FCA) has published a consultation on the regulatory rules for the long-term asset fund (LTAF) structure. This consultation closed on 25th June 2021. The proposed LTAF will be a new category of open-ended fund designed to enable authorised funds to invest efficiently in long-term illiquid assets. Illiquid assets include investments that will support the transition to a net zero carbon economy, such as investments in renewable energy infrastructure. UK investors currently invest in illiquid assets mainly through closed-ended structures but some investors prefer investing in open-ended funds. An ability to invest in illiquid assets, through appropriately designed and managed investment vehicles, could help support the transition to new zero. The FCA are not however proposing to require LTAFs to invest in any particular assets and ultimately firms will make a commercial decision about whether to offer or invest into such projects. The FCA’s consultation includes a section on who will be able to invest in the LTAF, and the FCA is expected to finalise rules in the Autumn. The Government cannot commit to a timeframe for the launch of these products as it will be for industry to establish and invest in these funds, but the Chancellor has previously outlined his ambition to see the first LTAF launch this year.