AIC comments on Bank of England’s Financial Stability Report

Evidence supports AIC’s recommendation of one-year notice periods.


The Association of Investment Companies (AIC) has commented on the Financial Stability Report of the Bank of England’s Financial Policy Committee (FPC), published today.

In the report, the FPC reiterates the importance of introducing notice periods for open-ended property funds as proposed by the FCA. It adds: “The FPC considered that, from the perspective of financial stability, and given the illiquidity of property assets in stressed conditions, there would be benefits from extending notice periods to at least as far as the range proposed in the consultation.”

The FCA’s proposed range for notice periods in its consultation ‘Liquidity mismatch in authorised open-ended property funds’, FCA Consultation CP20/15 was 90 to 180 days.

Ian Sayers, Chief Executive of the Association of Investment Companies (AIC), said: “The Financial Policy Committee is right to leave the door open to notice periods of longer than 180 days for open-ended property funds.

“Evidence from the Investment Property Forum shows that a ‘streamlined’ property transaction can take between 91 and 252 days. In stressed markets, this period could be much longer.

“We expect that a full examination of all the evidence will support our view that notice periods for open-ended property funds should be set at one year, as in the successful German property fund model.”

Further reading

The AIC’s response to the FCA’s property fund consultation, Don’t let the tail wag the dog, examines the evidence for setting notice periods for property funds and delivers its recommendations for tackling the liquidity mismatch in open-ended funds.


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Notes to editors

  1. The estimated period of 91 to 252 days for completing a property transaction is from the Investment Property Forum’s publication Streamlining transactions: Improving liquidity in commercial real estate, November 2018, page 6.
  2. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment. Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 356 members and the industry has total assets of approximately £221 billion.
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