The new Fit and Proper requirements  made provision for six new product categories (subcategories). In this article we only deal with two of these, namely CIS Hedge Funds and Structured Deposits.
In 2015 hedge funds were declared collective investment schemes  and therefore, fell into the licence subcategory Participatory Interests in a Collective Investment Scheme (CIS). The new Fit and Proper requirements now place CIS Hedge Funds into a product category of their own.
Similarly, Structured Deposits, which were previously included in the Long-term or Short-term Deposit product categories, have also been placed into a product category of their own.
For an FSP to be authorised for these new product categories (CIS Hedge Funds and/or Structured Deposits), an application must be made to the FSCA using the FSP Forms published on the new FSCA website.
However, a transitional dispensation does apply to FSPs that were authorised for Collective Investments Schemes, Long-term and/or Short-term Deposits on 1 April 2018. These FSPs must still apply to the FSCA to add these new product categories to their licence but, providing their application is submitted to the FSCA on or before 30 June 2018, they will be able to continue to provide financial services in respect of the financial products falling into the ‘new’ CIS Hedge Funds and Structured Deposit product categories, until their application has been processed and is approved or declined. An FSP that does not submit an application by the deadline date of 30 June 2018, will have to cease doing business in any financial product falling into the ‘new’ product categories on that deadline date.
The applicant will need to provide proof that the fit and proper requirements for each new product category for which the FSP is making application, are met. This will include evidence of the FSPs experience in respect of the new product category(ies).
The FSCA has clarified that where an FSP provides advice or intermediary services on a standard CIS Portfolio (i.e. not a CIS Hedge Fund Portfolio), and that standard CIS Portfolio has exposure to a CIS Hedge Fund as part of its investment strategy, the FSP or advisor does not have to be authorised for CIS Hedge Funds. However, the FSP (and its advisor) must be authorised for Collective Investment Schemes as the advice and/or intermediary services will be in relation to the standard CIS Portfolio.
FSPs that had Collective Investments Schemes, Long-term Deposits and/or Short-term Deposits on their licence on 1 April 2018 and have not yet submitted their application to add CIS Hedge Funds and/or Structured Deposits to their licence, must carefully consider their business strategy and decide whether they require authorisation for these new product categories. If they do, then they should urgently begin work on their application and supporting documentation to meet the deadline date.