Consumer Duty exemption for EEA funds poses threats of 'divergence' and 'misalignment'

Overseas Funds Regime

Industry players have questioned the level of consumer protection offered to UK investors, as the Treasury plans to exempt funds domiciled in the European Economic Area (EEA) from Consumer Duty requirements under the Overseas Funds Regime (OFR).

Experts have questioned the move, revealed by Investment Week, that EEA-based funds would not be required to comply with the Duty, arguing it could create an additional and costly regulatory burden for UK firms. Mona Christensen, head of client outcomes at Hargreaves Lansdown, argued the exemption of Consumer Duty requirements offered to the OFR was a "misalignment within the principles of the Duty and the expectations on UK firms".  Although she suggested the devil will be in the "secondary-legislation-detail", she argued the decision could have a significant impact on UK asset manag...