Fears are growing in the £7.7tn UK funds industry that a crucial arrangement allowing asset managers to make investment decisions on behalf of funds located in the European Union could be jeopardised by Brexit.

“Delegation” forms part of two important EU regulatory texts that govern how funds are managed and sold across Europe — the Alternative Investment Fund Managers Directive and Ucits. These permit asset managers to have funds located within the bloc but delegate investment and risk decisions to personnel outside its borders.