Financial Markets Conduct (Licensed Independent Trustees of Restricted Schemes) Exemption Notice 2021

Summary:  The Financial Markets Conduct (Licensed Independent Trustees of Restricted Schemes) Exemption Notice 2021 replaces the Financial Markets Conduct (Licensed Independent Trustees of Restricted Schemes) Exemption Notice 2016 that expires on 15 September 2021. View the Financial Markets Conduct (Licensed Independent Trustees of Restricted Schemes) Exemption Notice 2021.

The notice continues for a further five years, relief in respect of the  requirement for restricted schemes to have a licensed independent trustee that satisfies paragraph (c) of the definition of ‘independent’ in section 131(3) of the Financial Markets Conduct Act 2013 (the FMC Act)  on the same terms and conditions as the 2016 notice.

The exemption in the notice only applies to the extent that paragraph (c) of the definition of ‘independent’ in section 131(3) of the FMC Act provides that the licensed independent trustee must not be a director of a related body corporate of an employer that provides access to the restricted scheme for its employees or of an administration manager or an investment manager of the restricted scheme. The exemptions are further limited to certain situations involving the use of a sole corporate trustee.

The conditions of the exemption prevent the licensed independent trustee from being a director of any other related body corporate (other than the sole corporate trustee) and contain a restriction relating to the sole corporate trustee’s constitution.

Under the FMC Act, a restricted scheme must have a licensed independent trustee. To meet this requirement, the scheme may use a sole corporate trustee, provided it has at least one licensed independent trustee director. However, ‘independent’ is defined by the FMC Act, with respect to restricted schemes, in such a way that if the sole corporate trustee is related to the scheme provider, the director will fail the independence test. We consider this result is unintended, as the purpose of the independence requirement is to ensure the independence of the licensed independent trustee, rather than any corporate structure in which that licensed independent trustee sits. This exemption provides relief from this situation.