Statement on the progress of the Working Group on Productive Finance

By the co-Chairs of the Working Group on Productive Finance:

John Glen, Economic Secretary, Her Majesty’s Treasury

Andrew Bailey, Governor, Bank of England

Nikhil Rathi, Chief Executive, The Financial Conduct Authority


In November 2020, Her Majesty’s Treasury (HMT), the Bank of England and the Financial Conduct Authority (FCA) announced the creation of an industry-led Working Group on Productive Finance.footnote [1] The membership of the Group has been drawn from a broad range of market participants and interested bodies.footnote [2] The 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.footnote [3] This will allow greater investment in UK ‘productive finance’, including venture capital, private equity and infrastructure.

At its first meeting in January,footnote [4] 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.footnote [5] 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 Working Group met this week to discuss progress on:

  1. the work done to develop a commercially, operationally and legally viable authorised open-ended fund structure for long-term investments (the LTAF).
  2. 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.
  3. possible initiatives to support pension schemes in keeping costs low while at the same time securing overall long-term value for their members.

The Working Group also considered how public authorities and the private sector can take concrete steps to support the objectives of the Group. We are grateful for the significant contribution of the members and their support.

The publication today of the FCA’s consultation on the LTAF is the first concrete step.footnote [6] The FCA’s proposal for the LTAF will be an open-ended authorised fund that can invest in assets such as venture capital, private equity, private debt, real estate and infrastructure. The LTAF proposal aims to provide a structure through which certain investors can invest with appropriate confidence in less liquid assets and can potentially help to secure long-term value as part of a diversified portfolio. In turn, it is hoped that businesses and infrastructure projects will have greater access to long-term capital to support investment and wider economic growth.

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.


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