The Financial Conduct Authority has confirmed it does not consider investment company shares to be automatically complex for Mifid II purposes.
Under the Mifid II rules, firms distributing complex products without advice need to assess the knowledge and understanding of retail investors before allowing them to buy and sell them.
It had been suggested that the shares of investment companies traded on regulated markets should be treated as automatically complex.
But the Association of Investment Companies had disputed this, saying it risked disrupting the market and placing investment companies at a disadvantage.
Ian Sayers, chief executive of the AIC, said yesterday's (29 September) announcement was a welcome development.
He said: “The AIC has consistently argued that the view that investment company shares should be treated as ‘automatically complex’ was incorrect legally, as well as wrong in principle.
“Allowing products to be tested consistently against common criteria creates a level playing field and will mean that virtually all investment company shares will continue to be treated as non-complex.
“We will continue to work with the FCA to ensure that this position is adopted after the consultation.”
The investment company industry’s total assets under management reached a record high of £150.7bn at the end of August.
Assets in investment trusts have grown 50 per cent since January 2013 when they were £100.8bn.