On 7 May 2021, the Bank of England published a statement on the progress of the Working Group on Productive Finance.
In November 2020, HM Treasury, the Bank of England and the FCA announced the creation of an industry-led Working Group on Productive Finance. The Working Group’s aim is to support UK economic growth by developing practical solutions to the barriers to investing in longer-term and less liquid assets.
At its first meeting in January, the Working Group discussed the importance of broadening the range of productive finance assets UK investors have access to, and agreed to prioritise the development of the Long Term Asset Fund (LTAF) to support the Chancellor’s public commitment to set this up later this year. It also identified a number of barriers to investment in longer-term and less liquid assets more widely, particularly for Defined Contribution (DC) pension schemes, which it agreed to develop practical solutions for.
The statement notes that the working group has recently met to discuss progress on:
- The work done to develop the LTAF.
- The analysis undertaken to understand and begin to address operational barriers to investing in long-term assets, for example, barriers associated with investing in non-daily dealing funds.
- Possible initiatives to support pension schemes in keeping costs low while at the same time securing overall long-term value for their members.
The statement adds that the FCA’s recent consultation paper on the LTAF is the first concrete step.
The next phase of the Working Group will be focussed on developing the other concrete steps that market participants and the public sector can take to remove barriers to finance supporting investment in less liquid assets. It will set out its proposed solutions and timelines later this year.