A new industry working group to be convened by the UK’s finance ministry, central bank and financial markets regulator is to propose solutions for barriers to investment in “productive finance” by defined contribution (DC) pension funds and other types of investors.
This will include considering potential fund structures such as the Investment Association’s proposed Long-Term Asset Fund (LTAF), according to a joint statement from HM Treasury, the Bank of England and the Financial Conduct Authority.
Last week, in a major statement to parliament about the UK’s financial services industry, the Chancellor of the Exchequer said he committed to the first LTAF being up and running within a year “to encourage UK pension funds to direct more of their half a trillion pounds of capital towards our economic recovery”.
The working group will also build on the government’s Patient Capital Review in 2016.
“The working group’s mandate will be to agree the necessary foundations that could be implemented by firms and investment platforms, to facilitate investment in long-term assets by a wide range of investors,” the UK authorities said in today’s statement.
Membership of the working group will be by invitation and is set to be drawn from a range of market participants, including pension funds, asset managers, banks, corporates, and infrastructure firms.
The membership criteria are to include market footprint in the UK, relevant to the mandate of productive finance, contribution to overall representativeness to the working group, and engagement with productive finance issues.